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Do you live from paycheck to paycheck, use credit cards to keep up with your bills, and feel that you cannot afford to buy anything you want? Feeling like you don’t make enough money to save anything is a sign that you would benefit from taking a pro-active approach to saving thousands of dollars a year.
Having a savings account will not only bring you peace of mind but it’ll also help you manage your finances more efficiently. You’ll spend less money on your living expenses because, when a financial emergency arises, you won’t have to borrow the funds to cover the crisis and then pay them back with interest.
Saving money on a tight budget is definitely possible and could allow you to take a well-deserved vacation, put together a down payment for your dream home, or buy a new car.
Regardless of what you need money for, you can save up enough in creative ways if you make a few changes to the way you handle your finances.
You might think that the only way to save up money is to make sacrifices. Not even close! Saving money doesn’t have to be hard. You can still have an enjoyable lifestyle when you’re putting money away. The important thing is taking small, steady steps to save money every day and every month.
The key to saving money is to be smart about your finances.
In this post, I’m going to share how you can save a few dollars each day. The changes may look insignificant, but small savings add up! Following these tips will help you save thousands (at least $3000) in a year. Sooner than you think, you’ll have a hefty savings account and find even more ways to save money as you get the hang of it!
“If you wish to get rich, save what you get. A fool can earn money; but it takes a wise man to save and dispose of it to his own advantage.”
1. Take Control
Budgeting and money management don’t have to be complicated. You just have to find a system that works for you, and these tools will make managing your finances a lot easier.
Track Your Habits (the super-easy way)
Tracking your spending habits can take a while because you’ll want to see where your money goes for at least a month. The immediate benefit of tracking your spending is to identify the recurring expenses that you could easily avoid.
You could save from $3 to $15 a day depending on your habits:
- Do you pick up a cup of coffee on the way to work? Make coffee at home and buy a travel mug. You could easily save $3 or $4 a day.
- Do you only read a few articles from each daily newspaper or magazine you purchase? Look up the free versions of these publications online and save $4 or $5 a day.
Do you buy fast food every day for lunch or to feed your family? Feeding a family of four at McDonald’s costs at least $10 to $15 if you choose the most affordable menu items.
- You could easily save this money by buying groceries and cooking meals in advance.
Try these tools to get an idea of where your money goes and to easily identify expenses that you can avoid:
- Mint is a free app that tracks what you earn and spend. This app organizes your expenses into different categories so you can get an idea of how much you spend on groceries, clothes, entertainment, and more.
- BudgetSimple is another free tool that tracks your expenses. This tool is especially useful because it automatically generates suggestions to show you where you could cut down on spending.
Establish A Budget (minus the stress)
Once you’ve tracked your spending to see where your money goes, you can create a customized budget that works well for you.
The key to creating a budget that works for you is to find a method you like using. There are many online tools designed to create a budget that corresponds to your needs.
These apps require you to enter your income and link your bank accounts to automatically track your expenses for you:
- You Need A Budget, also known as YNAB, is one of the most popular budgeting apps. This free tool organizes your expenses by categories, helps you put money aside, and generates a budget based on your current expenses.
- The You Need A Budget website reports that people using this tool started saving an additional $200 a month on average.
- Pocket Expense and BudgetSimple are tools similar to YNAB. The main features are the same but you might find that the interfaces of these tools are more convenient.
If you’re not a fan of tools that automatically create budgets for you, there are some apps you can use to manually allocate where your money goes. This approach is inspired by the old practice of placing cash in different envelopes. GoodBudget and Mvelopes are two good online apps that make it easy to create a budget in this way.
Budgeting is definitely worth it, and these 21st-century tools make budgeting easier than it has ever been.
Stick To Your Budget (here’s how)
Establishing a budget is the easy part. Spending accordingly can be more difficult.
Following these three rules will help you stick to your budget and save $200 a month or more:
- Assess how much you need to cover all your recurring expenses. Determine what your bare minimum money amount needed is to survive. Put enough money aside as soon as you receive your paycheck. An app like Mvelopes or other online tools can help you allocate these funds. Your bank may even provide a tool in its online banking app.
- The money that is left after you cover all your expenses is not for splurging! Spend a reasonable amount on things you love because you worked hard and deserve a reward, but it’s important to make saving some of this money a priority.
- Use Level Money or a similar app to keep your spending under control on a daily basis. This app shows you how much money you can spend over the month, week, or day. Get into the habit of checking this app whenever you feel like buying something you don’t really need to decide whether or not you can afford to splurge.
Sticking to a budget requires discipline, but you can still live comfortably even while living frugally. Follow these rules to ensure you pay important bills and avoid spending too much on impulse purchases.
Establishing a budget that works for you and sticking to it could help you save $200 a month, or $2,400 a year!
You must gain control of your money or the lack of it will forever control you
2. Are You Letting Them Take Your Money?
Avoiding Banking Fees (best tips)
How much do you spend on banking fees? Banking fees can seem trivial, but these expenses add up over time. There is no need to pay for these fees when free options are available.
If your bank is currently charging a monthly fee for their services, find out why. In most cases, banks will charge you a monthly fee only if your average balance is under a certain number if you don’t make enough transactions or don’t receive enough via direct deposit to qualify for a free account.
The average monthly cost of a checking account is $7 at a bank and $2 at a credit union. Opting for a free alternative could help you save $84 or $24 a year.
If you cannot avoid a monthly fee at your bank, get a free checking account elsewhere. Some banks will even offer a signup bonus when you open a new account!
If you cannot find a free account that corresponds to your needs or would rather not open a new bank account, a good option is a service offered by American Express called Bluebird. Bluebird gives you the possibility to receive direct deposits and use the money to pay bills, withdraw money from an ATM, or write checks without paying any fees.
Overdraft protection is the only service you should be paying for if your bank doesn’t offer free overdraft protection. Did you know that the average American spends an average of $225 a year in overdraft fees? This money could be easily saved by taking a few minutes to sign up for this service.
Avoiding Payment Processing Fees
How do you pay your utilities and other bills? Depending on the payment method you use, you might be wasting money on payment processing fees. Even if these fees are only $2 or $3 for each transaction, this is money you could be saving. On a yearly basis, you could be paying around $100 a year in such fees.
Follow these tips to avoid payment processing fees:
- Use online banking to schedule automated payments directly from your bank account. This way, you can avoid paying the fee most utility and insurance companies charge you when you pay with a card. Automated payments are also a good way to avoid paying late fees.
- Always compare your payment options and ask about fees. Scheduling automated payments from your bank might not be the best solution for all your bills.
- For example, insurance companies often charge a monthly fee to process your payment regardless of how you pay your premiums. Consider paying your insurance premiums in one lump sum on a yearly basis to avoid paying this fee.
Avoiding Credit Card Interest and Late Fees (it’s possible!)
Do you use credit cards for bills or daily expenses? Take a look at your account to get an idea of how much you spend on interest and other fees. If you feel that your credit cards are costing you too much, contact the company and ask them to reduce your fees, or shop around for a better option.
Transferring your balance to a different card can be a good option if you qualify for a lower APR or for a card that doesn’t compound your interest on a daily basis.
It’s important to understand how interest is calculated on your credit card accounts. Most cards compound interest daily and use your average daily balance. This means carrying a higher balance will result in higher fees. You can easily avoid this by making a higher payment than usual if you make a large purchase with your credit card.
Use these strategies to reduce the amount of money you spend on credit card fees:
- Always pay more than the minimum monthly payment. Each payment goes towards the interest first, then towards the balance on the account. If you only make the minimum payment, your payment will cover the interest, but will not lower your balance by much.
- Making larger payments will help you pay off your balance more quickly and eliminate having to pay as much interest.
- The best method to avoid interest is to pay your entire balance each month. So whatever you charge in a month, pay it off that same month.
- Schedule automated monthly payments to avoid late fees. Most credit card providers also provide you with an online tool you can use to check your balance and make payments.
You could save roughly $350 a year by avoiding banking fees, overdraft fees, and payment processing fees!
Beware of small expenses; a small leak will sink a great ship
3. Become a Savvy Shopper
The best approach to smart shopping depends on how you and your family live, how much time you can spend on shopping and cooking, and on what you enjoy. Try different strategies to figure out what works for you and your family.
Adopt these simple habits to save on groceries and other household expenses:
- Use coupons and discounts to save on items you would usually buy. You’ve probably seen couponing TV shows or websites where people save hundreds of dollars each week with coupons. The truth is that this type of extreme couponing is incredibly time-consuming and tedious.
It’s good to have money and the things money can buy, but it’s good, too, to check up once in a while and make sure that you haven’t lost the things that money can’t buy
George Horace Lorimer
- Negotiate your rent
4. Clean Up Your Expenses and Spend More on Things That Matter (i’ll show you how)
You could save a lot by eliminating unnecessary expenses.
Consider these examples:
- Reduce your cell phone bill. Try these tips:
- Shop for a family plan if you need more than one line.
- Cancel your contract and switch to a service that will bill you only for what you use. This could help you cut down your phone bill to $20 or $30 a month if you don’t use it a lot.
- You may have a landline bundled with your internet service. Use this line, instead of your cell phone, whenever you’re at home.
- Wait until you are home and can use your own Wifi network if you need to go online and don’t have unlimited data on your phone.
- Shop around for an affordable Smartphone. Your own provider might not have the best price.
- Cut down your cable bill. There are more affordable options to watch TV. The downside is that you’ll get fewer channels or shows to choose from. Buy an antenna to watch TV for free over VHF and UHF signals and try different online streaming services to determine if these could be a good alternative for you.
- Exploring alternatives is worth it since the average monthly cable bill is $64.
- Save on your entertainment costs. You can save a lot by taking your family for a bike ride or by organizing a football game in the backyard instead of taking them to the movies or the arcade. There are plenty of free things to do that will help everyone get more exercise and have a great time!
- Avoid anything that is individually packaged. Buy food items in bulk and make your own snacks and to-go meals instead of stopping at a fast-food restaurant, gas station, or coffee shop.
- Think twice about buying a name brand. Spending more to get a name brand product is worth it if the product meets high-quality standards and will last longer or work better. However, spending more to get name-brand items that are not any different from cheaper options is a waste of money.
On the other hand, there might be some things you are not spending enough on, which results in more expenses in the long-term.
Consider these examples:
- Health insurance. Purchasing more coverage could help you save in the long-term. Raising your premiums to get a lower deductible and co-pay is worth it if your family visits the doctor a lot.
- Car maintenance. Repairs and preventative maintenance can go a long way towards lengthening the longevity of your vehicle. Learn how to do an oil change and perform other simple maintenance and repair tasks to save money.
- Home maintenance. Investing in new window panes, better insulation panels, and newer appliances could lower what you spend on utilities. If you’re renting, talk to your landlord about making a few improvements to help lower your bills.
- Quality products. Some products such as tools, razors, cookware, or furniture will last longer if you purchase slightly more expensive products from well-known brands.
- Organization products. Keeping your pantry and household supplies organized will prevent you from purchasing items you already have. Spending money on items that will help you get rid of an expensive bad habit or that will help you track your finances can save you lots of money.
You could save $64 a month by ditching cable and at least $20 a month by looking for a more affordable phone service provider, which roughly translates into $1,000 a year!
Before you make any purchase, ask yourself if you really need it. In most cases your life won’t be any less full or rich without it, and every dollar you save will reduce your ecological footprint
Kim McKay and Jenny Bonin
5. Trick Yourself Into Saving!
All the tips you have read so far will help you reduce expenses. However, you will not actually save money until you transfer it into a savings account. Saving is a lot easier if you make it a habit and set up automatic savings systems.
Follow these tips to put money aside without any stress:
- Try an app like Digit. This tool automatically takes money from your bank account and puts it aside. You choose the amount you would like to save each week. This is perfect if you’re busy and don’t even want to think about putting money into a savings account.
- Schedule automated transfers from your bank account to a savings account. If you would rather not trust a tool like Digit with your information, you can always use your bank’s online platform to schedule an automated weekly transfer to your savings account.
- Identify your two or three most expensive habits and get rid of them. This could be smoking, going to Starbucks, buying some snacks, or spending money to get extra lives in Candy Crush Saga. Put the money you would normally spend on these things into a savings account.
- Make saving money a game! Set some weekly or monthly goals and reward yourself when you reach these goals.
Using Digit or another system to put $5 aside every week means you would end up with $260 in a savings account by the end of the year!
You must learn to save first and spend afterwards
The tips in this guide total well over $4,000 in average savings, and they’re all fairly easy to follow.
Saving should not be hard because you already work hard to earn a paycheck. All the tips you just read can be easily incorporated into your daily life and will help you save money one dollar at a time.
The key to saving money is to find something that works for you. Go through these tips, find the ones that apply to your own spending habits, and get started on your savings!
Make a step-by-step plan, focus on adopting one new habit at a time, and reward yourself when you save. You’ll soon have hefty savings for emergencies, a down payment on a home, or for your next family vacation!
A man who both spends and saves money is the happiest man, because he has both enjoyments
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