When it comes to saving money, planning and discipline are the key factors. At the beginning — or after a particularly challenging financial setback or large purchase — it can feel impossible to get ahead. But, often, there are a few small changes you can make to kickstart the saving process.
So, regardless of whether you want to save money in the short-term, long-term, or both, we’ve rounded up some simple ways to alter your lifestyle and spending habits for the better. Sometimes, the smallest starts can really add up to impressive savings, and these strategies will help build your money management skills, not matter your financial literacy.
Create a Feasible Budget
Without proper planning, each paycheck can disappear without you realizing where all the money went. That’s why it’s important to create a budget. One of the tricks? Make a reasonable budget. In other words, if you try to limit your spending too much, you’ll be more likely to break your rules and fall into old spending habits.
To begin, evaluate how much you spend and what you spend it on. This involves making a note of what you purchase, where you shop, and the different categories in which you spend your money. Do this for about a month so that you can understand your spending habits better and determine where to cut costs.
The next step is to set a budget. Your budget can be monthly, weekly, or both if necessary. Whether you use a digital spreadsheet or write your budget out on paper is up to you. An easy way to create a working budget is to determine categories of spending based on what you learned about your spending habits.
These categories typically include:
- Housing (rent, mortgage, homeowner’s or renter’s insurance, and utilities, including electricity, water, gas, and internet)
- Groceries and toiletries
- Other bills (cell phone plan, streaming services, etc.)
- Transportation (car insurance, gas, public transit pass, rideshare costs, parking permit, etc.)
- Healthcare (medical insurance, prescription drugs, etc.)
- Debt (credit card payments, car payments, student loans, etc.)
- Extras (gym membership, salon costs, dining out, concerts, movie tickets, new clothes, vacations, etc.)
In your budget, set a maximum amount you can spend in each category every week or month. Keep track of how much you are spending as you go. Any additional money? Put that in a savings account. Ideally, between 10 and 15 percent of your monthly earnings should go into savings.