A penny saved is a penny earned. Saving money and assessing where you stand can benefit you today and down the road. Here is a step-by-step guide for how to develop a simple and realistic strategy to save money for all your short- and long-term goals.
Set Saving Goals
Setting saving goals is one of the best ways to save money. Think of what you might want to save for, then calculate how much money you’ll need and how long it might take you to save it.
Tip: Set a small, achievable short-term goal for something fun and big enough that you aren’t likely to have the cash on hand to pay for it, such as a new smartphone or holiday gifts. Reaching smaller goals—and enjoying the fun reward you’ve saved for—can give you a psychological boost that makes the payoff of saving more immediate and reinforces the habit.
Cut Your Spendings
Identify everyday expenses that you can spend less on, such as entertainment, dining out, television, cell phone.
Give yourself a “cooling off period”: When tempted by a nonessential purchase, wait a few days. You may be glad you passed—or ready to save up for it.Commit to eating out only once a month and trying places that fall into the “cheap eats” category.
Cancel subscriptions and memberships you don’t use—especially if they renew automatically. Use resources such as community event listings to find free or low-cost events to reduce entertainment spending.
Record your Expenses
Keep track of all your expenses—that means every coffee, household item and cash tip. Organize spending amounts by categories.
Tip: Use a free digital program or app to help you get started. Spending tracker will automatically categorizes your transactions for easier budgeting.
Prioritize your savings goals
Learn how to prioritize your savings goals so you have a clear idea of where to start saving.Or if you know you’re going to need to replace your car in the near future, you could start putting money away for one now.
Tip: Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs.
Create a workable budget
Organize your recorded expenses into a workable budget. So you can plan your spending and limit overspending. Be sure to factor in expenses that occur regularly but not every month, such as car maintenance.
Tip: Save 10 to 15 percent of your income.
Check your money saving progress
Check your budget and money saving progress every month. This will help you to follow to your personal savings plan, but identify and fix problems quickly. Understanding how to save money may even inspire you to find more ways to save and hit your goals faster.