Conquering your finances and improving your financial habits doesn’t have to be overwhelming. It can seem difficult, but you are not alone. What it comes down to is patience, dedication and mindfulness. Having greater awareness not just on your spending habits but also on your relationship with money can give you greater control and help you save more money.
Personal finance is one of the most important life skills to master, yet it’s rarely taught in school. Yet, when you enter adulthood, you’re expected to know how to successfully manage your finances despite never being taught how to do so. Every major financial decision you will make will be directly influenced by your ability to manage your spending. How you decide could impact the rest of your life.
No matter where you are in your money-saving journey towards financial peace, these tips will help you along the way.
Start With These Steps
1. Pay Yourself First Whether it’s $5 or $50, automate your savings by having a portion of your paycheck automatically deposited into your savings accounts on paydays before you pay any bills. Taking this approach helps you prioritize your savings plan.
2. Create Savings Goals Setting S.M.A.R.T. (Specific, Measurable, Achievable, Relevant and Time-bound) savings goals will allow you to plan how much you need for a down payment for a home, car, new refrigerator, wedding, vacation, college, retirement or any big purchase. Building an emergency fund of up to six month’s worth of living expenses will help you plan for a rainy day and should be amongst your goals.
3. Track Your Income Assessing how much money you are making is the first step in raising financial awareness. Without knowing how much you’re bringing home, it is difficult to efficiently managing your household finances.
4. Track Your Spending Consistently logging your non-discretionary (needs) and discretionary expenses (wants) lets you know where your money is going. After a week or so of tracking you may be surprised to see how those daily coffee purchases add up.
5. Create a Budget Create a budget to avoid overspending so that you always have enough money for things that are important to you. Consider the 50/20/30 rule of budgeting to plan for each month to gain control of your finances. (Check out https://medium.com/officialkakebo/why-you-should-start-budgeting-104850dac593)
6. Practice Financial Mindfulness Being aware of your financial habits will help you reduce financial stress and improve your relationship with money. Reflect on your progress regularly.
7. Have Multiple Savings Accounts A great way to track progress towards your savings is to have separate savings accounts for each goal allowing for easier automation on paydays.
Save by Controlling Discretionary Expenses
8. Cancel Unwanted Subscriptions Recurring subscriptions and memberships can be amongst the easiest to trim. If you aren’t using that gym membership or streaming service then cancel it.
9. Downgrade Your Plans When it comes to your cell phone, cable and data storage, you might be spending more than you consume. Downgrade your plan to save money or switch to a provider that offers a cheaper rate.
10. Make a Grocery List Time is a commodity that many feel there isn’t enough of so why spend it going aisle by aisle buying things that you don’t need. Creating a list with intention will help you stick to your savings goals and save you time.
11. Buy Generic A great way to save money is to buy the generic version which is nearly always cheaper. With certain foods, generics may not offer the better quality, however, the FDA regulates the standards for medications, baby formula and sunscreen and holds generics to the same standards and brand-named products.
12. Pack Your Meals During the work week, your largest discretionary expense could be the food you buy. While it takes additional time and effort to prep your meals, doing so could save you thousands of dollars annually not to mention it’s healthier.
13. Avoid Debt While there are advantages to having a credit card, you should only charge what you can afford. Using credit cards unwisely can lead to getting yourself in over your head in debt and can take several years to pay off.
14. Avoid Impulse Spending Giving in to impulsive buys can lead to poor financial habits and can prevent you from achieving your savings goals. For any big purchase, follow the 30-day waiting rule and if after the time has passed, you’re still thinking about it then purchase it. For smaller purchases, use the 24-hour rule.
15. Calculate the Hours To get a true sense of the value of your money, ask yourself how many hours do you need to work to be able to afford the purchase. Time is money.
16. Designate No-Spend Days Challenge yourself to go one day a week without buying anything. Not only will you reduce your spending, but you will also become more aware of how mindlessly you make small purchases.
17. Buy Used With apps like eBay, LetGo, OfferUp, Decluttr and even Instagram, buying gently used items for a fraction of the cost has never been easier.
18. Staycations Trips to the movies, circus and amusement parks can add up. Check your local library for free events and classes. Many host movie and game nights, story times, and special holiday events geared towards children. Walks in the park, hiking and bike riding are great sources of entertainment and are free.
Increase Your Income to Save More Money
19. Sell Your Extra Stuff With apps like eBay, LetGo, OfferUp, Decluttr and Facebook Marketplace, getting rid of your used belongings has never been easier. Check around your house for items that are in decent condition and start posting.
20. Rent Out Equipment Apps like ToolRent or PeerRenters let you get paid for loaning out your items with the community.
21. Create a Side Hustle The Gig Economy is on the rise. Whether you are a handyman, caricaturist, photographer, web or graphic designer or writer, apps like Thumbtack, Freelancer and TaskRabbit make it easy to offer your services for a price. Try starting a blog or driving for Uber or Lyft to maximize your time and grow your income.
22. Rent Out an Extra Room Reduce your own housing cost by listing your spare room or whole house while you’re out of town traveling on an app like AirBnB to save money on your rent or mortgage.
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