Let’s face it: Saving money isn’t the easiest thing to do. It’s also something many Americans struggle with, as evidenced by the fact that 40% don’t have cash in savings to cover a mere $400 emergency. If you’ve been having a hard time socking money away, you shouldn’t let your past failures drive you to give up. Instead, try making the following moves — they might help!
1. Follow a budget
Following a budget might seem like a waste of time, but actually, it’s one of the most effective ways to keep track of your spending. And the less you spend, the more you’re apt to save. To this end, go through your bank and credit card statements to see what your recurring monthly bills look like, factor in once-a-year expenses you should be setting money aside for during the year, and compare your total spending to your earnings. From there, you’ll see what’s eating up your money, and you’ll have an easier time knowing which expenses to start reducing.
2. Cut one big expense
You’ll often hear that to save money, you’ll need to seriously slash expenses to free up cash. But doing so on a long-term basis is unrealistic, because if you deprive yourself of all of life’s luxuries, you’re apt to get fed up quickly. And once you get fed up, you just might give up. A better bet? Pick one major expense in your budget to reduce. Maybe it’ll be your apartment — downsizing could lower your rent. Maybe you’ll give up your car — public transportation is generally much cheaper than maintaining a vehicle and dealing with monthly car payments. It doesn’t matter which recurring cost you choose to slash as long as you pick one that has a significant impact.
3. Write down your goals
Mapping out your financial goals could better motivate you to keep up with your savings efforts. In fact, according to Schwab’s 2019 Modern Wealth Survey, 78% of people with a written financial plan save money every month, compared to only 38% of people without a formalized plan. Keep in mind that you don’t need to hire a financial advisor to write up a plan (though there’s nothing wrong with going that route). You can sit down, either alone or with your spouse, if you have one, identify your top financial objectives, and figure out how much monthly savings it’ll take to meet those goals. Seeing that information in front of you might push you to improve on the savings front.
4. Make your savings automatic
It’s easier to save money when the temptation to spend it is removed. That’s why it pays to automate your savings. You can do so by arranging for a portion of each paycheck you receive to go from checking to savings off the bat, before you have a chance to touch that money. You can also automate your retirement savings if your near-term savings are in a good place, either by signing up for your employer’s 401(k) plan or finding an IRA with an automatic savings option and setting that arrangement up.
Saving money means making sacrifices and giving up certain luxuries that aren’t always easy to forgo. But you need savings to cover unplanned bills, fund your golden years, buy a home, put your kids through college, or meet whatever other goals you’ve set for yourself. Therefore, keep playing around with different tips and tricks designed to give your savings a boost. You may be surprised at how well some of them actually work.