5 Tips for Saving Money – What I’ve Learnt
Saving money is crucial. However, for many people, it seems not so easy to do. Probably, where to start saving is the hardest step for us. This article discusses tips for saving money.
Keep Track of Spending
The first step for saving is to know how much we spend. Thus, we have to keep track of all our expenses, including all household items, every coffee, and cash tip. Once we have the data, we could organize these numbers by categories, like groceries, gas, mortgage, insurance, and others with a total of each amount. We could use the credit card and bank statements to help make sure that we are accurate with all of the expenses without overlooking any of them.
Set a Budget
It is hard to know how much we should put away for savings if we do not have a workable budget. From the tracking of spending, once we get an idea of how much we spend in a month, we could start to organize all the expenses into a budget. This budget should outline how our spending measures up to our income so that we could plan our reasonable spending while limiting overspending. Be sure to include the expenses that do not occur every month but happen regularly, such as car maintenance and others.
Find Ways to Cut Expenses
Believe it or not, there are many ways that we could find to cut spending to save money. Identify the non-essentials that we could spend less on, like entertainment and dining out. Discover ways to save money on our fixed monthly spendings such as television and cell phone. The followings are some ideas to cut expenses.
- Use resources for free and low-cost events to cut entertainment spending.
- Reduce eating out as well as trips to a coffee shop.
- Reduce the fees charged by our banks.
- Cancel subscriptions and memberships that we do not use.
- Stop non-essential purchases for a while.
- Quit smoking.
- Trade-in the luxury car for the cheaper one to save fuel and maintenance, or use public transport.
- Refinance our mortgages.
Set Goals for Saving
It is always a good idea to set goals for saving. First, think about what we would like to save for, such as getting married, a vacation, a child’s education, a down-payment for a house, or retirement. Then, figure out how much we will need as well as how long it will take us to achieve it. The goals for saving could be short-term, like an emergency fund, vacation, or a car down-payment, and long-term, like a child’s education, a house deposit payment, or our retirements.
Although the investments in the stock market come with the risk of losing our investment, they could also create the opportunity for earning when the market grows. If we are saving for retirements or a child’s education, we could put money into an IRA or 529 plan investment account.
Prioritize Our Goals for Saving
After our expenses and income, our goals for saving money probably have the most impact on how we would allocate our savings for the future. Emergency savings should have high priority; without it, an unexpected car repair or a trip to a hospital could force us into debt as well as derail our goals. Pay down the debts with high interest as soon as possible as they could get in our way toward the savings goals. Always keep in mind that the long-term goals like saving money for retirements should not take a back seat because of our shorter-term needs, like a vacation or some season tickets.