Three Ways to Save Money
Saving money is like exercising—almost everyone says they want to do it. If you’re interested in how to save money, the first thing you need is commitment and dedication to taking the steps necessary to reach your goal—especially when there are enticements for you to spend your money at every turn.
You can do it—learn how to save money each month with these three tips:
1. Make a Budget
The first step for anybody seriously interested in how to save money is to make a budget. This is more than scribbling an estimate of what you earn and spend on a napkin. Make time to gather your pay stubs, your bills, your bank and credit card statements and your receipts, and make a detailed accounting of each and every penny you earn and spend.
If you don’t have all of these documents handy, it should be the first clue that you need to get even more serious about saving money. Start gathering your info for an entire month, then sit down again with it in hand (or on-screen).
Next, use a spreadsheet or accounting software to itemize your income and expenses. Add up the cost of your necessities like rent/mortgage, utilities and car payments, then subtract them from your income. Whatever amount you have leftover determines how much you can spend on non-necessities, along with what you need to save. Most importantly, you’ll have a clear vision of how your purchasing choices affect your ability to save and vice versa.
2. Automate Your To-Do List
There’s an old adage that directs you to “pay yourself first.” This is an easy fix—sign up for automatic deductions directly from your paycheck into a savings account. It’s the single-best way to save money because you never have a chance to spend it elsewhere.
Along these same lines, if your company offers pre-tax health or medical savings accounts, and you typically have medical expenses, participate in one of them. Although you must usually use all of the money within the year, you save because you won’t be taxed on that part of your income. Plus, the savings account can keep you from stressing over medical bills, keeping you in better health, and saving even more in the long run.
Consider scheduling your recurring monthly bills—like utilities and car payments—through Bill Pay. This way, money used to pay your bills gets withdrawn directly from your bank account without you having to remember due dates. This easy-to-use account feature can keep you from having to pay late fees and interest on late payments.
3. Take a Breather
Whether you know it as the “one-day rule” or the “24-hour rule,” it’s excellent advice on how to save money each month—just wait on buying something you think you want. Know the difference between your wants and needs and resist impulse buys. The costs of even small impulse purchases like a chocolate bar or a fast food meal can add up over a year.
If there’s a big purchase you want to make, give yourself a day to think about it. Chances are pretty good that you won’t want it as much once you put distance between yourself and that coveted item. If you still have a problem with impulse control, observe the even more austere “30-day rule.” Make yourself wait an entire month to really determine whether you need that new pair of shoes, video game system or car.
Learning how to save money from salary isn’t that difficult if you dedicate yourself to the task. Now’s your chance to go from a spender to a saver in the new year.