If you’re feeling a bit overwhelmed about how to save money, you’re not alone. One in five Americans have little to nothing in their current savings (Bankrate). A quick Google search on “how to save” can yield thousands of complicated tips, tricks, and methods—enough to make anybody’s head spin.
But we’re here to set the record straight: Whether you’re aiming to save for a significant expenditure or just looking to build a financial safety net, there are many ways to jumpstart your savings journey. In fact, effectively saving means considering the long-, mid-, and short-term strategies and tactics. Keep reading to learn our easy-to-adopt money-saving tips!
Building Your Savings a Little Each Day
Take It Out of Your Hands
When it comes to decisions like how we spend money, emotions often outweigh logical thinking. Over time, negative financial habits like impulse spending—even in small amounts—can quickly leave you with little to no money left over to save.
To make sure your daily spending doesn’t get in the way of your savings, we recommend taking the decision out of your hands and moving it into the hands of AI-based technology. Link your checking account with an online tool that finds opportunities to put away money on your behalf. For example, apps like Digit have algorithms that determine safe and small amounts of money to withdraw into an FDIC-insured savings account. That way, you’ll be saving money without realizing it!
Make it Harder to Shop Online
Anyone who regularly shops online knows just how easy it is to go overboard, especially when there is an advertised sale. You visit your favorite online retailer with the mindset to just buy a new shirt, and before you know it, you’ve added shoes, a tablet, a stand mixer, and maybe even a jet ski to your online cart.
Retailers make it even more convenient to check out by storing your shipping and billing information in an online account. However, if you force yourself to manually input your shipping address and credit card number every time you order, you’ll likely make fewer impulse purchases. When your ability to purchase stops being just a click away, chances are you’ll think twice about that jet ski.
Go Old School With Cash
Swiping a credit card to pay for things can feel like using Monopoly money. It doesn’t feel real… until you receive your monthly statement, and it’s like you landed on “Boardwalk.” When you want to change your money mindset, try paying with cash instead of credit or debit. Having to hand over cold, hard cash physically may put the price of something in perspective for you.
One of the additional benefits of using cash is that it generates change! At the end of every day, empty your pockets and your wallet and store the change in a jar. When the jar is full, take your change collection to the bank and deposit it directly into your savings. What once may have fallen in between your couch cushions is now helping to create a financial cushion.
Saving Money By The Month
Determine Your Real Discretionary Income
One of the biggest roadblocks to saving is that by the end of the month, you’re too strapped for cash to contribute to a savings account. However, many people don’t take the time to crunch the numbers and understand their cash flow. If they did, they might find a lot of extra money that is being mismanaged.
At the end of each week, take a few minutes to track your expenses. Then, at the end of the month, add up all your costs. Make sure to lay out your fixed expenses and do your best to estimate the cost of variable expenses like gas or groceries. Once you have this number, subtract it from your monthly income. You might be pleasantly surprised at how much you’ll be able to save.
Lower Student Loan Payments
Is student loan debt hindering your ability to save? Take a look at switching to an income-driven repayment plan, especially if you are just out of school. Basing your monthly payment on your income could give you the flexibility to lower your monthly payment by hundreds of dollars every month. However, this decision should not be made without taking into consideration that your student loan(s) will likely take longer to pay off, and as a result will cost more in interest.
Long-Term Saving With Big-Picture Goals
Set Some (Realistic) Goals
Don’t just think about saving in general, think about why you’re saving. Are you getting ready to buy a home? Do you have a baby on the way? Applying to graduate programs? Keep your ambitions in mind as you save, as it’ll help keep you motivated.
It’s not enough to dream it, however. You have to do it! That’s why it’s essential to set specific, realistic, and measurable goals. Instead of saying, “I’m going to pay off my credit card debt faster,” try, “I will save $100 extra each month and put it towards my credit card debt.” Don’t be afraid to start small. Little steps, which are more manageable, can quickly add up to achieving your long term goals.
Take Control of Debt
Ideally, you’d be able to avoid debt entirely. But with 77% of Americans carrying some kind of debt (The Motley Fool), it might be easier to win the lottery. To tackle large amounts of debt, one of the most straightforward solutions is debt consolidation.
If you have multiple high-interest payments, debt consolidation may be right for you. Debt consolidation occurs when an individual takes out a lower interest personal loan to consolidate multiple debts, leaving them with one lower monthly payment. Because it frees up some money that was going toward your debt, debt consolidation allows you to save money in the long run. As a bonus, it also helps you avoid future debt as you build your savings. With an emergency fund in place, you won’t have to charge unexpected expenses to your credit card or take out additional loans.
Now that you’ve learned about these proven strategies, we hope saving money—even on a small budget—doesn’t seem so intimidating. If you are looking for a way to increase your savings potential by consolidating debt, a personal loan from Credit Direct can help! Apply online to check offers in minutes with no effect to credit score.