Saving money is the key to financial security for anyone who is hoping to get in control of their finances. Once a person or family has some money saved, they’re able to handle emergencies without going into debt, pay off the debts they have, and work towards being able to retire.
Fortunately, there are hundreds of ways to save money if you’re willing to try. These five ways are some of the easiest ways to put something aside.
1. Get Out of Debt
You’ll have heard this many times before, but only because it’s true. If you are sitting on a credit card with a rolling balance, you’re paying interest every month just for the convenience of spending money you don’t actually have. If you have a personal loan outstanding, even if it’s APR starts at just 5.8%, you’re still paying a hefty amount out to the bank. Do what’s best for your financial situation and ay those debts off. Just think of how much extra money you would have each month without those payments going out! Use Dave Ramsey’s debt snowball as your guide.
2. Save a Percentage of Your Pay
By picking a percentage instead of a dollar amount, it is a lot easier to put money aside with each pay, even if you have your hours reduced. In pay periods when you work overtime or get a bonus, you’ll automatically save more. If possible, set up your direct deposit to automatically forward the same percentage of every pay check to your savings account. Start small by saving only one or two percent of each check so that you don’t miss the money, but gradually increase the amount over time.
3. Save What’s Left Each Month
A great way to boost your savings is to save a percentage of what’s left in your checking account the day before payday. Many people pay all their bills as soon as they get their pay, then spend the money that is left over until their next pay. If you hate saving because it makes you feel as if you don’t have enough to spend, this method could work for you. Spend like you normally would while waiting until the day before you get paid. Then, transfer a percentage of what is left in your checking account to your savings account. This will let you continue your spending habits, but you’ll be able to save a lot more. By not transferring everything, you’ll leave yourself enough money to make larger purchase without having to dip into your savings account. Many people who use this method discover that they save only small amounts for the first several months, but that they develop a good habit that develops into them saving hundreds of dollars a month.
4. Save Half of Every Bonus Payout
If you have a job where you frequently get extra checks, or if you regularly get a bonus or other “extra” compensation, then try to save at least half of each of these checks. Because most people don’t need to spend this money on necessities, it is easy to save a large portion of these checks.
5. Save Your Spare Change
Every night, empty your pockets or wallets and put the spare change into a jar. When the jar is full, take it to your bank and have it deposited into your savings account. While this method will not allow you to save large amounts of money, it can be a good way to put something aside if you’re living very close to the edge. It’s also a good way to start saving if you’re just starting out.
6. Budget Conservatively on Utility Bills
When making your budget for the year, use the highest utility bills you received as the amount you plan to spend for the month. For example, if your electric bills range from $50 to $250, enter $250 as your electricity bill for every month. When the actual bills come in, pay the amount due and deposit the difference between what you paid and the amount you budgeted into your savings account. Depending on how greatly your bills vary, you could potentially save thousands of dollars a year.