Let’s be honest — most of us want to try and save more money, but only a few know how to get started. This instruction by Payday Depot will teach 8 practical steps to start saving money. Find out how to cut your everyday expenses, get rid of unnecessary spending, and develop healthy financial habits.
1. Track Your Spending
First, you must calculate your average monthly expenses. Find out how much you spend on groceries, coffee, online games, etc. We recommend you keep track of it for some time rather than just estimate it. Taking notes in a textbook, using Google sheets, or mastering specialized programs and apps is a great way to keep everything accounted for. Once you have the data, sort it into categories and add up the totals. Check your bank account statements to avoid missing anything.
2. Adjust Your Monthly Budget to Cut Expenses
Now it’s time to start creating a budget. Set a target to save a certain sum every month to have an emergency fund or start saving for some grand project that you dream about. Don’t forget about payments that occur on a regular basis, but not every month. After a certain time, your savings per month should reach 15% – 20% of your income.
3. Locate Cost-Cutting Opportunities
As you’ve got your saving goals figured out, it’s time to cut spending. Prioritize your expenses and get rid of things you can live without. Look into these ways of trimming expenses:
- Downgrade or cancel some subscriptions.
- Search for free entertainment alternatives.
- Limit small everyday purchases (coffee, snacks, etc.).
- Cook at home rather than go out to eat.
4. Set a Purpose for Your Savings
You’ll be much more motivated to pursue your goal if it has a specific target. Think of projects that you had to postpone because of lack of money. It can be something that can be achieved fast (vacation, home renovations, hobbies) or something that will take several years (buying a new house or car, accumulating start-up capital for your own business).
5. Prioritize Your Finances
Give equal attention to all your expenses. It’s also helpful to break them down into categories like health, commodities, car maintenance, and so on. You might find even more possibilities to cut your expenses after you get done with this step.
6. Choose Appropriate Tools
A lot of financial products can help you manage your savings. A regular savings account and short-term deposits will be a great choice for money that you might need to access fast. For goals that take more time, such as retirement planning, you should take a look at insured retirement funds or even long-term investments in reliable stocks. The last variant, though, will take some serious research and, probably, the help of a professional consultant.
7. Automatize the Saving Process
Most banks have a feature that allows transferring money between your primary and savings accounts automatically. You can pick an exact time and percentage of money to be transferred and make savings a habit. You can even split your paycheck so that a portion of your profits goes to your savings right away.
