Did you know that only 37% of Americans have enough money saved up that they could cover an emergency that cost them $500?
Having an emergency fund saved up can help reduce your financial stress. When you have some extra money in the bank, you know that if your car needs to get fixed or you have to find a new apartment unexpectedly, everything won’t fall apart.
On top of that, most people hope to be able to retire someday. In order to retire comfortably, you’re going to want to start putting money aside now.
Not everyone is born knowing how to save money. If it’s time for you to start trying to build up your savings account, you can use these ten steps to start building a financial cushion and retirement savings.
1. Keep Track of How Much You Spend
Many of us don’t even really know where our money goes every month. One of the first steps to money-saving is tracking where your money goes. This way you can identify where you are spending more money than you thought (we’re looking at you, daily trip to the coffee shop) and come up with a budget that allows you to save.
2. Understand the Difference Between Wants and Needs
When it comes to saving money, it’s important to understand the difference between what you actually need and what you simply want. While you don’t want to totally deny yourself things that bring you joy, you might find after you start keeping track of your spending that you’re buying a bunch of stuff you don’t really need.
You need to pay for housing, utilities, groceries, insurance, transportation, and a few other essentials. Of course, this is a bare-bones list, and each particular person might have some other essentials on this list. That being said, you might find that you’ve been relying on purchasing items that are things that you could easily go without while you’re working on saving money.
3. Say Goodbye to Debt
If you’re wondering how to save money, you’re definitely going to want to tackle any debt you’re carrying. When you have monthly debt payments to take care of, it’s robbing you of your income every time it’s time to pay that credit card bill.
You might consider trying the debt snowball method, which entails starting with your smallest debt and working towards your largest.
It is amazing how freeing it feels to be done with debt. Living debt-free will allow you to put more of your money into savings, and it will reduce the amount of stress you have about your finances.
Getting rid of debt can also help your credit score, as your debt-to-income (DTI) ratio is one aspect of how credit scores are calculated. It’s a good idea to learn the basics of credit because it can affect many important aspects of your life.
4. Save Money on Meals
Every year, the average household spends $3,526 on food that they purchase outside of their home every year. You can start putting more money into your savings account every month if you simply started cooking for yourself at home.
On top of that, you can save money on your grocery bills with a little bit of organization. Consider starting to use meal planning every week and making a grocery list so you are only buying what you need. You also might try meal prepping, where you make several days or a week’s worth of food at a time to help you resist the urge to order takeout.
5. Use Automation to Your Advantage
If money saving is something that you struggle with, you might find that setting up your bank account to automatically transfer money to your savings account every month can help you build savings without even thinking about it. You can also have a percentage of your paycheck automatically transferred to your savings account if that works better for you.
6. Take Advantage of Your Retirement Savings Plan
Does your employer offer a 401(k) match? If so, it’s a good idea to take full advantage of it. If you need to set up an account, talk to your HR department.
7. Reduce Energy Costs
You can make a few simple tweaks to your home to save money on your electric bill. Consider installing LED lightbulbs and dimmer switches as well as washing your clothes in cold water and fixing leaky pipes.
8. Buy Generic
One of the easiest ways to save money when shopping is to buy generic rather than name brands. In a lot of instances, there is hardly any difference between the generic brand and the name brand.
9. Cancel Subscriptions and Memberships
There’s a good chance that you’re paying for a number of different subscriptions such as Netflix, Spotify, gym memberships, Amazon Prime, Hulu, or trendy subscription boxes. If you find that you don’t use any of these regularly, consider canceling them. Remember, you can always subscribe again if you decide that you can’t go without it.
10. Learn How to Have Fun For Cheap (or Free!)
If many of the things you do for fun are taking a serious toll on your wallet, such as expensive brunches or nights at the bar, consider rethinking how you have fun. There are millions of ways to have a great time for cheap or even free. Try going on a hike at the parks and conservation areas in your city, have a picnic with your friends, or try something exciting like randonauting or geocaching.
No Matter How Much You Make, You Can Save Money!
It’s a common misconception that only wealthy people can afford to have a savings account. While it might be easier to put some money aside for a rainy day if you’re the CEO of a megacorp, with some organization, planning, dedication, and time, you can start to save money no matter how much you make.
Did you find this article filled with financial tips on how to save money helpful? If so, be sure to check out the rest of our blog for everything you need to know about finance, business, and real estate!