Regardless of how unstable your current financial standing is, you need to appreciate the fact that there are ways to turn things around. It takes a little planning and self-discipline, but even a few dollars here and there can grow into a nest egg over time. With very good planning and research, it could even grow into a fortune. Saving money is hard to do at first, but if you make it a habit and start to see that money piling up, it can very satisfying and even addictive. Here are some simple strategies for saving money.
1. Live on a budget
How much can you really afford to spend vs. what you make? Setting a household budget and lowering your expenses helps to ensure that you will have that extra money to save. As an experiment, try saving your receipts for a few weeks. Then go over them and decide what is essential, and where you could be saving. For instance, be mindful of wasting electricity or gasoline. Choose generic items at the grocery store.
2. Automate Savings
If you haven't opted for direct deposit of your paycheck into your checking account, do so. Decide how much you can afford to set aside for savings each week, and ask the bank to automatically transfer that much from your checking to a savings account. You're less likely to spend money that's in a separate account from what you normally use to shop or pay bills. You can always lower or raise the savings amount as you go forward.
3. Set aside an emergency fund
Too many people are basically stretching their credit and spending excessively so they can enjoy the most comfortable lifestyle they can afford. As a result, they wind up living paycheck to paycheck. When an emergency expense comes up you're in trouble, especially if you don't have the credit to borrow additional money. Decide what you should have in reserve, say $500 or $1,000 as an emergency fund. Slash your other spending until you've got that, then squirrel it away in a separate savings account, and don't touch it until you need it.
4. Eliminate High-Cost Debt
Many people will apply for additional credit cards as way to have access to extra spending money. But even if you have great credit, it's still debt and you're still paying high interest rates. Think about how much you pay in interest over time. You should pay off and cut back your credit cards to one or at most two. Start with the cards that are easier to pay off. If you keep up your good credit and meet your payments, your primary card issuer is more likely to increase your borrowing limit over time. Meanwhile, you aren't making high-interest payments every month on multiple cards. Thin about having that money as monthly savings.
5. Watch where you eat
Many of us spend a good part of our money going out to eat. It's hard not to; working people need to unwind with a good lunch, it's a great way to spend an evening with family and friends, and people who spend a lot of time on the road almost have to stop at a restaurant on a regular basis. But it doesn't have to drain your spending money. When thinking about bargains, you should also be thinking about affordable restaurants.
6. Have a plan
To gain some motivation and will power, it helps to set a goal. Why are you saving? For retirement? To pay off your mortgage quicker? Start a business? Have specific dollar amounts in mind, and think about how much money you'll have to save each month to realize your goals in a reasonable time frame. Then look over your spending and decide where that money will come from.