As you probably know, there are a bazillion ways to save money. Sure, most these techniques work, but some are clearly more effective than others. To save money quickly, you need to focus on the right savings strategies. Here are 8 tips to help you save money faster!
#1 – Use a budget.
I know you don’t want to hear this, but a budget is the most important tool you have to help you save money. For most people, the thought of using a budget conjures up visions of ramen noodles and clipping coupons. But, a budget doesn’t have to be scary or restrictive. It doesn’t mean you have to go without. In fact, a budget actually helps you get the things you want by encouraging you to use the money you have more efficiently.
Simply put, a budget is your financial plan for the month. That’s it. You’re creating a plan for how you’ll use your money. With a zero-sum budget, which happens to be my favorite type of budget, you account for every penny you make that month. This helps you:
- Control your money and make it do what you want.
- Remember and plan for bills while avoiding overspending.
- Get what youreally want by using your money more efficiently and effectively.
Seriously, a budget is one of the most powerful financial tools at your disposal. Once you understand how to create a budget and control your finances, you’ll learn how to save money in no time!
#2 – Track your spending.
Tracking your spending is your budget’s sidekick. While your budget lays out the plan for the month, tracking your spending provides the actual results. Additionally, it helps you to identify and fix any problem areas within your budget itself.
When you know exactly what and where you’re spending, finding ways to save money becomes even easier. You’ll have a clear picture of where your money is going, be able to determine if you stayed within your budget, and have a running total of your expenses throughout the month. If you happened to spend more than you planned for, don’t fret. By tracking your expenses, you’ll know exactly where to make adjustments in next month’s budget.
#3 – Keep an emergency fund.
When learning how to save money, most people are naturally excited to get started. However, excitement only carries you so far. Expenses will pop up that you didn’t expect, and – unfortunately – most people don’t have a cushion. If these expenses derail your budget, it’s easy to feel defeated and quit, costing you big bucks in the process. That’s why you need an emergency fund.
An emergency fund is a pile of money you keep stashed away to cover emergencies. You already know things are going to break, problems are going to happen, and money sucking issues will arise. The best way to prepare is to start an emergency fund.
Start by saving $1,000 for emergencies. To do this, save just 10% of your take home pay in your eFund until you’ve hit the mark. Once you know how to save money, try to squirrel away even more. A fully funded emergency fund should have 3 to 6 months worth of expenses stashed in it. When you hit that mark, you should be adequately prepared to handle almost anything thrown your way.
#4 – Pay yourself first.
If you want to save money, you have to make it a priority. There’s no better way to save than to pay yourself first.
Think of your savings as an expense – your most important expense. Before you pay your other bills, you need to save money for yourself. That means sticking some money in your 401(k), stashing money in your savings account, and putting a big fat check in your Roth IRA BEFORE you pay other bills. That way, no matter what happens, that money won’t disappear. You’ve made saving your most important financial priority.
Also, take advantage of free money whenever you can. If you have access to a work sponsored retirement account, save at least enough to qualify for your employer match. So, if your employer matches 4% of your salary, save at least 4% of your own money to max out the benefit. That’s free money just waiting for you to claim it. Don’t let it go to waste!
#5 – Make it automatic.
If you have trouble saving money, make it easy for yourself. Automate your savings so you don’t even have to think about it. Saving money automatically eliminates the need to make physical deposits. It also decreases the chances that you’ll spend it before you save it. In fact, when you automate your savings, it’s almost like you never had the money to begin with.
Most employers offering retirement plans allow you to directly deposit money into your account. You can do the same thing with other types of savings accounts too! Just directly deposit money into savings accounts, Roth IRAs, and emergency fund accounts.
If you want, you can even automate the rest of your financial life. After automatically transferring money to the proper accounts, set up automatic bill pay to pay your bills on predetermined days each month. The initial setup takes a little time, but you’ll spend just a few minutes a week once you’re done. Just check in a few times a month to make sure everything is running smoothly. You’ll save more money, pay your bills on time, and have a good idea of how much you have left to spend each month.
#6 – Destroy your debt.
One of the best ways to save money is to get out of debt…and to do it fast! Here are some great ways to make extra money, to put towards destroying that debt! Debt is the biggest obstacle standing between you and the life of your dreams. It crushes your ability to save and clouds how much things are actually costing you. Besides that, you owe interest on all of that debt, so the purchase price is always higher – sometimes by a lot.
So, how do you get out of debt? Paying off high-interest credit card debt is a good start. Refinancing it to a lower rate could decrease your monthly payments and save you thousands in interest. If your debt has an interest rate of over 10%, you may benefit by consolidating that debt into a personal loan.
#7 – Focus on the big items.
When searching for ways to save money, start by tackling the big stuff first. Yes, clipping coupons and eating leftovers can have a positive effect on your bottom line. But, initially, these small measures aren’t going to save enough to keep you motivated.
Eliminate your credit card debt. Look for ways to lower your rent or car payment. Eat out once a week instead of once a day. Pick the low-hanging fruit first, then make smaller adjustments. Instead of saving pennies at a time, you’ll be saving hundreds!
#8 – Track your progress.
When you do something long enough, things get tedious. Even for super savers like me, saving money can get boring. That’s one more reason to track your progress. You need little wins every once in a while. By watching your net worth grow, you’ll get the chance to pop champagne and celebrate every once in a while. Plus, you’ll be able to tell if all of these awesome changes are getting you where you want to go.