Sometimes the hardest part about saving money is getting started. Here are 15 simple tips to save money and reach your financial goals.
Table of contents
- Importance of saving
- Emergency fund
- What to save for
- 15 money-saving tips
- Frequently asked questions
Importance of saving
Creating habits to help you save money is important because it’ll prepare for unexpected events or allow you to do things that you enjoy without worrying about the money aspect.
To develop great habits, you have to start by being intentional. When you’re intentional about your finances, you’ll be aware of your spending habits and what you can improve.
This will help you spend less on things you don’t need and put more money towards your future.
According to a study by PLoS One, saving money increases your sense of security and well-being. Aside from the tangible things that you can purchase with money, it benefits your mental health and how you feel.
The first step to a savings plan is to build an emergency fund. You can’t predict the future and this is why it’s important to have a safety net in case of an emergency.
When you’re building your emergency fund, aim for 3 to 6 months of living expenses (Source: WA State Department of Financial Institutions). Factor in housing costs, food, groceries, insurance, debt payments, and personal expenses.
Setting aside money into a savings or money market account is a great way to prepare for any emergencies or life events.
Dave Ramsey, author, and founder of Financial Peace University has what he calls the 7 Baby Steps. The steps take you from building an emergency fund to building wealth.
What to save for
Before you begin to save money, you should know what you’re saving for. Having a reason and purpose for saving will help you be consistent and disciplined.
The following ideas are things to save for:
- New Car
- Starting a business
Regardless of what you’re saving for, it’s important to set goals to keep you accountable.
15 money-saving tips
The following tips will help you save money for long-term and short-term goals:
1. Switch your cell phone carrier: Switching to a new carrier can save you money because many carriers offer discounts if you switch to them. This can lower your monthly bill or your current carrier may offer you a deal to stay with them.
2. Do a balance transfer: Check with your financial institution or credit card company to see if there are any promotions for balance transfers.
Getting an offer such as 0% APR for 12 months is a great way to eliminate your debt without paying interest. Instead, you can save the interest you would’ve paid.
3. Improve your credit score: Your credit score plays a role in the interest rate a lender will give you (Source: FINRA). Improving your credit score can lower the interest rate which means you’ll pay less money in interest.
4. Cancel your gym membership: A study conducted by the American Economic Review shows that the majority of people that have gym memberships either go a couple of times a month or don’t use it at all.
If this is the case for you, you can save money by canceling your gym membership and working out at home.
5. Unsubscribe: If you get a lot of marketing emails from stores, consider unsubscribing. This can help you avoid being tempted to shop when you get emails about “limited-time offers” or “must-have items”.
6. Get a raise or new job: Making more money can help you save more as long as you manage it well. If your current job won’t give you a raise, consider going to a new employer.
7. Do freelance work: If you have specific skills or talents, being a freelancer can help you monetize what you’re good at. This is a great way to earn more money which can lead to more savings.
8. Break up with cable: If you aren’t using it or don’t need it, cancel it. You may find that it’s cheaper to rent a movie or stream shows on a service like Netflix or Hulu than to pay for premium packages or cable.
According to a study by Leichtman Research Group, the average cost of cable per month is $106 which is $1,272 per year.
9. Sell things that you don’t use: When you’re cleaning your home or decluttering your closet, sell the items that you don’t use but are still in good condition. Selling your unused items is a great way to make extra cash.
10. Eat at home: A study by Visa shows that eating out costs more than twice as much as eating from home. After getting groceries and making meals, the average cost of a meal from home is $6.30 whereas a meal out averages to more than $10.
11. Buy generic brands: One of the biggest differences between brands is marketing. It’s common to find brands that use the same supplier or ingredients but one costs much more than the other.
The reason they can do this is because of marketing and the brand they’ve built. To save money, buy the generic brand.
12. Use washable towels instead of paper: Instead of using paper towels, use cloth towels to dry your dishes or wipe the counters. This will help you save money because you can reuse the cloth towels instead of buying more paper towels. It’s also better for the environment.
13. Plan your groceries: Before you go grocery shopping, figure out what you’re going to eat throughout the week. When you plan ahead, you’ll know what you need and avoid buying things that sound good at the moment.
14. The 24-hour rule: To avoid impulsive purchases, try waiting for 24 hours before buying something. The 24-hour rule helps you think about whether or not you want or need the item.
If you’re shopping online, put the item in your cart and enter your email information because the brand might send you a discount code to complete your purchase.
15. Save automatically: Through online banking or at your financial institution, you can set up automatic transfers.
After you figure out how much you can save and the frequency, set up an automatic transfer so that you don’t have to think about manually transferring the funds. This is a great way to save money without thinking about it.
Frequently asked questions
The 50/30/20 budget means 50% of your after-tax pay is spent on necessities, 30% on wants, and 20% on savings or paying off debt. It’s a simplified way to budget without involving every detail.
Cashback and rewards programs, such as Ibotta or Rakuten Rewards, are great for earning money or rewards on things you’re buying anyway. Customer loyalty programs are great for earning rewards at places you often shop at.
If you need something and it’s on sale, that’s a great opportunity to purchase it and save money. As long as the item won’t put you in debt, it’s a good decision.
No, you’re not too old to start saving. In fact, you’ll be better off starting now than later. According to Vanguard, if you want to save for retirement and you’re older, the key is to contribute as much as you can.
There are many reasons to begin or continue saving money. You may want to build an emergency fund or have the ability to take your family on a trip. It’s important to have a clear goal or purpose for the money that you’re saving because it’ll make it easier for you to be consistent.
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Featured image courtesy of Unsplash.