According to a recent study from bankrate.com, 20% of Americans save only 5% or less of what they make. About 28% save 6% to 10% and just 16% save more than 15% of their income. If you wonder how to start saving money yourself, we should let you know that it doesn’t have to be hard. Hopefully, this guide will help you!
It goes without saying that you can’t achieve anything if you don’t set goals first and foremost. In the absence of realistic goals, it’s going to be hard to motivate yourself to make the appropriate decisions needed to save any money.
You have to ask yourself “Why do I want to start saving money?” Do you want to save money for a big trip you want to make? Are you looking to buy a house? Or are you saving for your retirement? The bigger the goal, the bigger the time to achieve it. It’s all about setting the goal, being honest with yourself and consistent.
Upon deciding on your goal, write it down; you need to be crystal clear about what and why you are saving for. For example: “I’m going to save 15% of my monthly income to buy a motorcycle because I’m tired of waiting for the bus every day in the rain”.
It’s simple: You can’t spend money you don’t have in the first place. Saving automatically is the single best thing you can do. A portion of each paycheck goes directly into a saving account. And the rest of the money is yours to spend as you please.
To make it even easier, you can talk to the payroll department at your job and ask them to set up an automatic deposit. Give them a different bank account and request a split of your salary between your earnings and savings account.
Utilize a zero-sum budget
A zero-sum game is a situation in which to gain an X amount of something, someone else has to lose the same X amount of that. But how can zero-sum describe your budget strategy? The Simple Dollar explains:
“The point of a zero-based budget is to make income minus the outgo equal zero. If you cover all your expenses during the month and have $500 left over, you aren’t done with the budget yet. You must tell that 500 bucks where to go. If you don’t, you lose the chance to make it work for you in the areas of getting out of debt, saving for an emergency, investing, paying off the house, or growing wealth. Tell every dollar where to go.”
To put it simply, money without a purpose is money wasted.
It’s said that the best way to save money is to not spend any money. And it’s true. What this means in practice is cutting expenses and reducing your expenditure. So what can you do about it?
For a start, consider removing luxuries from your life. Stop buying unnecessary electronic gadgets. You can select a cheaper service plan for your phone. Also, you can start buying clothes and furnishings from thrift stores. Cutting expenses is about simple ways to save money every month: you can save from takeaway coffee and beverages, from eating outside and from your entertainment.
Also, you shouldn’t forget that starting anything is half the battle. Thus, it will take a few days to get used to your new consumer habits, but once this happens, you will see how easy it was to start saving money.