It seems commonplace to some but how to save money is very important to everyone or at least should be. Living paycheck-to-paycheck or even worse, living beyond one’s means is a surefire way to run into a number of financial hurdles now and later on in life.
How to save money starts with your mindset:
DOs and DON’Ts
DO think of saving as a way to get what you want
DON’T think of saving as something that ties your hands from what you want
DO a budget analysis before you start a savings plan
DON’T haphazardly set a random amount of money aside and call it your savings
DO set goals
DON’T ignore putting together a budget
DO an allocation of monthly after tax income to determine what you have extra following your expenses
DON’T “eyeball” your income and think “you got it”. As there is a set number of money incoming for most people, there too should be a set number of money you save each month.
You want to work toward the ultimate goal and for many people, that goal is different. Maybe it’s buying a house or getting that investment property to make extra money. Whatever the case may be, how to save money is where the plan begins. It’s interesting to think but you can find things on a daily, weekly or even monthly time frame that will allow you to save different amounts of money.
How Can I Save Money Daily?
This is a bit more micro-oriented but believe it or not, small tweaks in your daily spending can add up by the end of the year and you might not even see it plainly until you put together your savings plan. How much to you spend on breakfast or lunch? Maybe it’s the difference between preparing your meals at work instead of spending money at a restaurant. An example of this is spending $0.25 to $0.50 for a bag of oatmeal instead of spending $3-$5 for a prepared order of oatmeal from a local breakfast spot.
With the average number of workdays in a month being 21.62, a simple tweak like this means spending roughly $10 per month on breakfast by preparing it yourself versus spending upward of $108 when purchasing the same food from a restaurant. It doesn’t seem like a lot day-to-day but when you add it all up at the end of the month, the numbers speak for themselves.
Also, think about your original budget. When it comes to grocery day, how much are you spending on unnecessary items? Are you taking advantage of discount codes or coupons? Is there really a difference between store brand and name brand for the item you’re looking at? Like the breakfast example above, though it comes down to a few dollars a day, by the end of the month, that number could add up to quite a bit.
Think about it this way, saving an extra $200 a month could mean the difference between renting that studio apartment and getting the 1 bedroom you really wanted. For others, that $200 extra at the end of the month could be the difference between paying for a $150/month Ford Focus lease and getting the $350/month Mercedes Benz C-class.
How Can I Save Money Monthly?
On a monthly level, these savings are a bit more “involved” and require some legwork. However, the amount you can save may be well worth it by the end of the year. But where do you look to save money on a monthly level?
For starters, think about what you spend money on each month:
- Auto Loan
- Cable Payment
- Electric Bill
- Adjust Your Student Loan Payments
These are just a few things but as far as monthly spending is concerned, it may be as easy as refinancing a loan. By decreasing your interest rate on things like a mortgage or student loan, you could be able to get a few hundred back into your monthly cashflow. Choosing a different car that may not have as many bells and whistles but still gets you from point A to point B could also be an easy way to keep some of your hard earned money in your pocket. By the end of the year, that extra $50 you saved by switching to a streaming video platform instead of paying for cable could be the difference between a staycation down the street or a vacation in another time zone.
How Can I Save Money For The Long Term?
Long-term saving may need a bit more finesse as expenses change each year; sometimes each month depending on your situation. But building an emergency fund to account for unforeseen life events or even to spend on that dream vacation is important. Proper planning and a disciplined savings approach are key in this case. Setting goals is the main focus for long-term saving. Being able to put together a saving strategy and knowing how to build a budget will be big advantages for those looking for long-term savings.
A few things you can do to save for the long-term include track your spending, readjust specific habits that may be standing in the way of your goals and paying close attention to your needs versus your wants will help as well. Putting all timeframes in focus is important to keep in mind no matter what your goals are.