Financial Ed: 5 Ways to Start Saving Money
If you want to get serious about saving money, we have three words for you: budget, budget, budget.
The prospect of putting together an emergency fund or going off credit sounds daunting, if not completely impossible. Still, you’ve seen others do it. Everybody started somewhere.
So, how do you go about saving money?
1. Get to know yourself (spending-wise)
The problem with expenses is that there are too many of them. Small ones, big ones, and mandatory ones. Before you know how to save, you need to know from where to save.
Just because you’ve put forth the intend to save your pennies doesn’t mean more pennies will appear in your account to fill up your piggy bank!
Instead, start paying attention to how many times you eat out, go for a coffee run, or find yourself shopping for things that seemed necessary but then never used.
Track your spending for one or two months to get a full picture of what’s going on.
2. Make amends
So, after staring at your bank statements for a month, you’ve realized your electricity bill is too high. Great, it’s time to shut off those lights when you’re not using them, unplug your appliances, and swtich out your bulbs for low-consumption alternatives.
Spending too much on coffee? Invest in a Moka pot. Even though the up-front price is higher, you probably spend more on coffee in a month than the price tag on that coffee maker.
3. Sell things you don’t use
In many cases, we might not have enough wiggle room to start saving or to make small investments like low-consumption bulbs.
To help you get started, sell things you don’t use anymore.
Throw a garage sale, online or on your own property, and either invest the money in things that will help you save—like that Moka pot—or put your earnings into an emergency fund.
4. The Emergency Fund ™
You’ve heard it all before. Everyone needs an emergency fund. Get yourself an emergency fund. But, here you are, waving your hands to the sky and shouting, “in this economy?!”
No matter how uphill the battle, securing an emergency fund needs to be your top priority.
Urgent matters will always come up: an unexpected illness, a surcharge, school tuition, you name it.
But, as they say on every airplane ride, you need to put on your own oxygen mask before you can help others.
Having an emergency fund enables you to operate from a more level-headed perspective. It makes you more willing to invest and less likely to become anxious and stressed when dealing with day-to-day expenses.
5. The Pay, Save, Spend rule
Saving money is more a psychological game than it is a mathematical conundrum. There are many excuses—and extremely valid at that—that can get in the way of moving those few dollars into a separate account.
So, next time you get paid, try the Pay, Save, Spend rule.
First, pay all your bills (preferably through automatic payments that immediately deduct the amount when your paycheck rolls in).
Then, put away the amount you decided to save.
Finally, take stock of what’s left and divide it by weeks. This is now your weekly allowance.
In the event that an unexpected bill throws off your expenses, you can take a moment to gauge whether it is sustainable to put away the same amount you had expected to save.
Sometimes, you might be able to share the burden by sacrificing some of your savings and some of your weekly budget.
We hope these tips have brought you some clarity when it comes to saving money. Do you have any other pressing financial questions that need answering? Tweet us @riacorporate!