Someone starting to save money.

This Is How To Start Saving Money

Are you having a hard time saving money? It can be difficult, especially if you are not accustomed to putting money away. Luckily, anyone can get into the saving grove if they take the right steps. Here are a few things that you can do to get into saving mode. Put one of these tips to use or do them all and supercharge your savings.

1) Track Your Spending

Tracking your spending will allow you to see where all of that money of yours is going. You might not think that you have enough money to save until you realize how much you are really wasting.

Get a journal and physically make an entry for every purchase that you make. Include everything from that morning cup of coffee to the quarters you drop at the toll booth. Do this over the course of a week and then tally up the results. What you will likely find is that you are wasting a lot of money on purchases that provide little value to you. That toll you pay for to save a minute of driving, for example. A dollar might not seem like a lot of money, but over the course of a year it could be hundreds of dollars. Money that could be used to boost your savings account.

Once you have determined all of the areas where you are wasting money, come up with a plan to make changes. Determine which expenses are really important to you and then divert the rest into your savings account.

2) Make Saving A Budget Priority

Hopefully you have a written budget that details your monthly expenses. If not, you should get one. It does not have to be anything fancy, just a written list of your fixed expenses and allotments for variable expenses like food and entertainment.

With your budget in hand, shift your focus to saving money. Set an amount for monthly saving that is equal to 10 to 20 percent of your take home pay. Then balance your budget to make it work. This could be as simple as cutting entertainment expenses or it could be more involved and it might necessitate something like moving into a cheaper vehicle. Whatever the case, you need to save money and you will need to make changes to make it work.

3) Free Up Room For Saving

You might not think that you have room for saving money, but this is usually not the case. Just about everyone can free up money for savings if they make the right choices.

If you do not have money in the budget to save, it means that you are living beyond your means. Savings should be the first thing that you do with your paycheck and then you should adjust your bills to be able to live on the remainder. If you can not do this, you need to downgrade your quality of living to make room for savings. This could mean making some hard decisions.

Ideally, you would just cut back on entertainment expenses, but this may not be enough to reach the 10 to 20 percent savings level that you need to be at. To reach this goal and free up the money you need, you may need to choose a cheaper vehicle or move into a more affordable home. Hard choices but worthwhile ones.

4) Automate Your Savings

Once you have the money that you need for savings, you need to automate the process. This will ensure that you keep up with savings and it will allow you to live as if the money was never in your regular spending account.

To accomplish this, the best way solution is to have a portion of your direct deposit sent directly to your savings or investment account. If this is not an option, set up an automated transfer from your checking account on the morning that you get paid. The idea is that you get the money out of your checking account as soon as possible in order to avoid temptation.

5) Set Attainable Goals

Your overall goal when saving money should be to put enough money away to comfortably retire. While this is a great goal, it is hardly encouraging. After all, you will need to save hundreds of thousands of dollars over the course of decades. It is a goal that you can reach, but one that will take you a long time, so it is hard to see the finish line.

If you need more motivation, you should set smaller goals. For those of you just starting out with savings, make your goal 2000 dollars and then reward yourself when you reach it. Then, make another goal but make sure that you can achieve it in no longer than 12 months. Setting these small, attainable goals will help keep you on track.

6) Separate Your Savings

Finally, you should separate your savings. The last thing that you want to do is keep your savings in an account that is linked to your regular checking account. This is the most convenient option but it makes the money too accessible. If money is too easy to reach, it leaves you open to temptation. Make the money harder to get to and you will be less likely to make an unplanned impulse purchase.

To do this, set up an online savings account with another bank. This will still allow you to reach your money in an emergency, but the day or two that it takes for a transfer to go through provides for a cooling off period. As a side benefit, online savings accounts, such as Marcus from Goldman Sachs, generally pay higher interest rates. They are not dramatically higher, but an extra interest point never hurts.

Posted by
James

James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.