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Are you living month to month – just waiting for the next paycheck to come in so that you can pay off your bills and go on a spending spree? Well, you aren’t alone.
According to a 2017 GoBankingRates survey, 57 percent of Americans have less than $1,000 in their savings accounts. An astounding 39 percent of Americans have zero dollars saved. Just 1 in 4 Americans have a cash cushion of $10,000 to fall back on in an emergency situation.
While you may be in the majority, wouldn’t it be nice to stop living like this? What if you actually had money in your savings account? Think about how much less stressful your life would be, and how much more secure your future would feel.
Learning how to save money requires discipline and forethought, but it can be done. Here are a few tips and suggestions to get you started:
1. Develop a Plan
You can’t save money if you don’t have a plan. More specifically, you need a budget that provides clarity of both your income and expenses. Once you have an idea of the numbers you’re working with, you can develop a savings plan. For some people, this might look like $100 a month. For others, it might be possible to save thousands with every paycheck. Don’t get discouraged by comparing your situation to others. Focus on yourself and how you can make incremental progress on a month-by-month basis.
2. Automate Your Savings
Be honest with yourself and understand your strengths and weaknesses. If you know that you lack the self-discipline it takes to rein in out of control spending, take practical steps towards streamlining your savings.
One thing you can do is sign up for a bank account that automates the process of saving. Chime Banking is a great example. They have features that allow you to automatically round up transactions to the nearest dollar and then transfer that amount into a savings account. They also allow you to automatically transfer 10 percent of every paycheck into savings. These might seem like small things, but they add up over time.
3. Stop Eating Out
If you were to track your spending over the course of a month, you would be shocked by the amount of money you spend eating out. Even if you’re only grabbing fast food lunches during the workweek, you’re spending more than $120 per month (or roughly $1,500 per year). By preparing your own meals, you can eat for a fraction of the cost.
4. Invite Friends Over for Drinks
Grabbing drinks with friends is another expensive budget item. Let’s say you go to a bar twice a week and order two cocktails each time. Using conservative prices, each cocktail costs you $7. That means you spend $28 per week – not including tips – on four drinks.
A much cheaper alternative is to invite friends over to your place for drinks. For $28, you could buy an entire bottle of liquor – which might make 30 or 40 drinks.
5. Find Free Hobbies
Most people blow through their money on the weekends in an effort to fill time. If you can find a way to fill your time without spending money, you’ll save a ton.
Believe it or not, there are plenty of free or cheap hobbies. These include things like jogging, disc golf, crafting, reading, board game clubs, or recreational sports leagues.
6. Use a Shopping List
Whether you’re grocery shopping or making a trip to Walmart to grab some essentials, you should never walk into a store without a shopping list. A shopping list helps you stay focused and allows you to remember what you came into the store looking for.
If you find items that you want to buy, but that aren’t on your list, put them back and make a note. If, after buying what’s on your list and returning home, you still want the item, you can go back to the store at a later date and purchase it. This might seem excessive, but you’ll find that you normally don’t feel as much urgency to purchase an item after you’ve removed yourself from the shopping environment.
7. Get Rid of Your Car Loan
Car loans are a total rip-off. Not only are you paying a high interest rate, but you’re taking out a loan on depreciating asset. If you aren’t careful, you can end up owing more than the car is worth.
Always buy cars in cash. If you must take out a car loan, buy a very moderately priced vehicle and attempt to pay it off as fast as you can. This will give you more room in your budget and accelerate your savings.
8. Stash Away Unexpected Money
From time to time, we all come across unexpected money. This may come in the form of a tax refund, job bonus, birthday check, lottery winnings, or small inheritance from a relative. Instead of blowing these funds, make a point of stashing away all unexpected money into your savings account. You may be able to save thousands of dollars per year this way.
Be a Smart Money Manager
It’s time to grow up and learn how to manage your money in smart and responsible ways. The tips and strategies outlined in this article are just a start. As you become more disciplined and your income increases over time, you can develop more sophisticated techniques.
What’s holding you back from starting today?