Tips to start saving money
The only thing you need to start saving money is to start. Seeking easy ways to cut off your expenses to save money for something you want to buy may seem complicated at first.
This guide will help you on your way to your financial goals.
1. Keep track of how much you spend
Before you start saving you should make it clear for yourself how much you actually spend. Try to record all your expenses during one month – not only on substantial purchases, but also on every single trifle you buy (a newspaper, a tea, a snack, etc.). As soon as you’ve collected these data, classify the figures you’ve got by category – food, utilities, entertainment, etc. – and calculate the sum for each of them.
2. Plan your budget
Now that you know how much you spend during the month, you can get down to planning your expenses, limit certain issues and even start putting money away in case of emergency. Don’t forget that you also have some regular expenses that don’t happen every month but should be registered anyway (car maintenance check-ups, for instance). To plan your budget correctly, consult the page creating a budget.
3. Start saving
As soon as you’ve already put all your spending and income on record, you should create one more category on the list. That would be saving. This category should take minimum 10-15% of your earnings per month. So, if you see that you spend too much to afford that it’s high time you start limiting your expenses. Look at the list of non-essentials that you can spend less on. Perhaps you could do without cafes or cinemas in order to save something for more important things like your home or your car.
4. Be goal-oriented
It’s easier to save when you definitely know what you’re saving for. Set a number of goals you want to achieve and define a time period for each of them. Here’re some common short-term goals, that’ll take no more than 1-3 years:
Buying a new vehicle
- Starting an emergency fund that would be sufficient to cover at least 6 months of expenses in case you lose your job
Paying all the taxes
As for long-term goals, that are set for several years or decades, they often include:
Starting to save for retirement
Saving for your children’s education
Saving for repairing, remodeling or changing your house or apartment
5. Lay down your priorities
It’s obvious that different people have different priorities when it concerns things they want to spend money on. So no one except you can decide what your saving goals would be. But establishing your priorities you must also bear in mind how long you’re able to wait to carry out your plans and how much you’re ready to put away every month. First of all you should arrange your goals according with their importance and set a required sum of money per month for each one. Remember that choosing one point as a top priority you’ll have to push some others into the background until you reach the main one.
6. Some strategies to achieve your goals
If you start putting away for short-term goals, use these deposit accounts:
- A regular savings account, with an easy access
- A high-yield savings account, with higher interest rate than a regular one
- A CD (certificate of deposit), with the system of freezing your money at a certain interest rate for a fixed period of time
- A money market savings account, with many interest rate options that could also grow together with your savings
7. Use automatic transfer
This way you can do the process of saving money much simpler. If you just move the money out of your checking account you’ll avoid the temptation of spending them on something else. But first of all you should decide how often you want to do the transfer and which accounts you want to involve. It’s also possible to contribute to your saving account with every pay you do with your checking account. Doing it daily you can achieve your goals even faster.
8. Watch your progress
Keep track of your results regularly. First of all, it’ll help you stick to your plans, second, it’ll give you a chance to identify and solve problems as soon as they arise, and last but not least, it will definitely motivate you to save more in order to speed up the process.