The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
5 Easy Tips: How to Save More Money
Imagine what you could do with a little extra cash in your savings account. Could you afford a down payment on a new home? Maybe you’re thinking about starting your retirement savings. What about that dream vacation that has always seemed out of reach?
Saving money is a vital part of your financial plan but finding extra funds to stash away can be difficult. Here are a few tips on how to save more money and get closer to reaching your financial goals.
1. Use the 50/20/30 Guideline
This method breaks down your spending into three sections – 50 percent of your monthly income is allocated for fixed costs (mortgage or rent payments, car payments, gym memberships), 20 percent for financial goals (savings, 401(k) contributions, paying off debt) and 30 percent for flexible spending (entertainment, hobbies, shopping).
2. Adjust Your Direct Deposit
Something most people do when they set up a direct deposit into their account is deposit a fixed amount into their savings and the rest into their checking. However, you should actually adopt the opposite method by depositing a fixed amount into your checking account and anything above that into your savings. If you don’t have anything above that fixed amount in your checking, you’re less likely to overspend.
3. Open a Separate Savings Account or 401(k)
In addition to switching your direct deposit, having a completely separate savings account is another practice that can help you save money. If you have a separate savings account that is not attached to your checking account, it is harder to see those funds. Keeping that money out of sight can make it easier to resist transferring cash to your checking account and spending your savings. Use this as either your emergency fund or for savings goals such as a down payment on a home.
Pro Tip: Make saving money even easier by doing most (if not all!) of your banking online anytime and anywhere. Set up and make the most of online banking!
If your employer offers 401(k) benefits that they will match, this will help grow your retirement fund even faster. Check to see if your employer will match a certain percent (or even dollar-for-dollar!) because it’s never too early to begin saving for retirement.
4. Create a Budget
One of the easiest ways to keep track of your finances is to download a budgeting app, such as Mint®, to your cell phone. The app will automatically build a budget based on your spending habits, and you can even manually adjust the budget to make it more personalized. This will allow you to see where you’re spending your money on a daily and monthly basis. Being able to see exactly what you’re spending your funds on can help you figure out where you can cut corners in order to save more.
It’s also helpful to plan out your shopping by looking at coupons and deals while making shopping lists, especially for trips to the grocery store. Knowing exactly what you need before you head to the market can help you avoid unnecessary purchases and using coupons can help you save a few extra dollars!
5. Give Your Savings a Raise
Instead of depositing extra money from your paycheck into your checking, put it into your savings. If you get a pay increase or bonus at work, increase the amount of your direct deposit that is going to your savings. Since it’s money you weren’t spending before, you are less likely to miss it, and this can help you reach your short- or long-term goals even quicker!
The sooner you get started, the easier it will be to grow your funds and secure your financial future. Now that you know how to save more money, make a commitment and set your goals in writing. Soon you’ll be on your way to reaching those financial goals!