The first step to saving money is knowing how much you are spending. For a month, record everything you spend. That means every coffee, every newspaper and every snack you buy throughout the month. Once you have the information, organize these numbers by category, for example: gasoline, groceries, mortgage and so on, and get the total amount of each.
Now that you have a good idea about what you spend per month, you can put together a budget to plan your expenses, limit overspending and make sure you have reserves in an emergency savings fund. Remember to include the expenses that are generated regularly, but not every month, such as car maintenance checks. Find more information on creating a budget.
Taking into account your monthly expenses and income, create a savings category within the budget and try to represent at least 10 to 15 percent of your net income. If your expenses will not allow you to save that amount, maybe it’s time to make a cut. Look for non-essential things that you can spend less on, such as entertainment and dinners outside, before thinking about saving money on essential things such as your vehicle or home.
Starting is much easier if you set savings goals. Begin by deciding how long it will take you to achieve each objective. Some short-term objectives (which can usually take 1 to 3 years) include:
Long-term savings goals generally require many years or even decades, and may include:
Each person has different priorities when it comes to saving money; therefore, it is convenient to decide which saving objectives are the most important for you. Part of this process is to decide how long you can wait to save for a goal and what amount of money you want to save per month to get it. As you do this for all of your objectives, order them by priority and separate money into your monthly budget as planned. Remember that setting priorities means choosing. If you want to focus on saving for retirement, some other goals may have to be postponed until you have made sure you have achieved your main goals.
If you are saving for short-term objectives, consider using these deposit accounts insured by FDIC:
For long-term objectives consider:
Automatic transfers to your savings account can make saving money much easier. If you transfer money from your checking account, you are less likely to spend the money you wanted to use for the savings. There are many options to configure transfers. You choose how often you want to transfer money and what accounts you want to use for transfers. You can even divide your direct deposit between your savings account and your checking account so that each payment check contributes to your savings. Thinking about saving as a regular expense is an excellent way to keep your savings goals in line with expectations.
Monitor your progress every month. Not only will this help you meet your personal savings plan, it will also help you identify and correct problems quickly. With these simple ways to save money, you may even be inspired to save more and reach your goals faster.