How to Save Money

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How to Save

Money

 

Whether you want to go on a vacation, buy a house, or

enjoy a comfortable retirement, youve got to learn to save money.

Unfortunately, many of us tend to spend whatever we earn or more. We know

savings are important for unexpected emergencies or major life changes, but we

just cant seem to put some cash away for a rainy day. Want to stop living from

paycheck to paycheck? Read on and start saving today.

 

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Dont buy things you do not need. Sure, its easier said

than done, but sometimes you might want to forgo that extra bottle of soda or

bag of candy at the supermarket exit, or anything else that wont benefit you in

the long run.

 

Figure out what you need to save for and how much you

need to save. For short-term goals, this is easy. If you want to buy a video

game, find out how much it costs; if you want to buy a house, determine how

much of a down payment youll need. For long-term goals, such as retirement, youll

need to do a lot more planning (figuring out how much money youll need to live

comfortably for 20 or 30 years after you stop working), and youll also need to

figure out how investments will help you achieve your goals.

 

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Set savings goals. Once you determine how much you need

to save, establish a timeframe (i.e. I want to be able to buy a house two years

from today.) Set a particular date for accomplishing shorter-term goals, and

make sure the goal is attainable within that time period. If its not

attainable, youll just get discouraged.

 

Figure out how much youll have to save per week, per

month, or per paycheck to attain each of your savings goals. Take each thing

you want to save for and figure out how much you need to start saving now. For

most savings goals its best to save the same amount each period. For example,

if you want to put a $20,000 down payment on a home in 36 months (three years),

youll need to save about $550 per month every month.

 

Add together the installment amounts (monthly, weekly, or

per paycheck) for all your savings goals. Can you afford to save this total

each period? If so great; if not, proceed to the next step.

 

Pay yourself first. Savings should be your priority, so

dont just say that youll save whatevers left over at the end of the month.

Deposit savings into an account (or your piggybank) as soon as you get paid.

 

Keep a record of your expenses. Write down everything you

spend your money on for a couple weeks or a month. Be as detailed as possible,

and try not to leave out small purchases.

 

See where you can trim your expenses. Youll probably be

surprised when you look back at your record of expenses: $300 on ice cream,

$100 on parking tickets? Youll likely see some obvious cuts you can make.

Depending on how much you need to save, however, you may need to make some

difficult decisions. Think about your priorities, and make cuts you can live

with.

 

Reassess your savings goals. If theres absolutely no way

you can fit all your savings goals into your budget, take a look at what youre

saving for and cut the less important things or adjust the timeframe. Maybe you

need to put off buying a new car for another year, or maybe you dont really

need a big-screen TV that badly.

 

Make a budget. Once youve managed to balance your

earnings with your savings goals and spending, write down a budget so youll

know each month or each paycheck how much you can spend on any given thing or

category of things. Try to leave a little room for minor unexpected expenses.

 

Stick to your budget. A budget wont do you any good if

you dont follow it religiously. Build some self-discipline, and remember why

youre on a budget in the first place.

 

Open an interest-bearing savings account. Its a lot

easier to keep track of your savings if you have them separate from your

spending money. You can also usually get better interest on savings accounts

than on checking accounts (if you get interest on your checking account at

all). Consider higher-interest options such as CDs or money-market accounts for

longer savings goals. You can also open an online savings account with one of

the companies that offer them. Look around for the best savings interest rate

and try to find one that adjusts its rate as the federal interest rate changes.

You can then set up an automatic transfer from your checking account to your

high interest savings account. Many employers allow you to deduct savings from

your paycheck. The money is directly deposited in your savings account so you

never even see it on your paycheck. You can also have investments for

retirement taken directly out of your pay, and the taxes may be deferred with

this option. If you typically keep a large balance in your checking account,

consider moving most of that money into a linked savings account. Keep the

money in savings until it is time to pay bills, then transfer enough from

savings into checking to cover your bills. Make sure you check with your bank

to see what the minimum balance requirements are for your checking account so

you dont get hit with additional fees.

 

Dont use your credit cards. This is one of the most

effective ways to reduce spending. Use cash for as many purchases as possible -

youll be more conscious of what you are spending your money on.

 

Kill your debt. Simply calculating how much you spend

each month on your debts will illustrate that eliminating debt is the fastest

way to free up money. Once the money is freed from debt payment, it can be

easily re-purposed to savings.

 

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“Fortunately

art is a community effort - a small but select community living in a

spiritualized world endeavoring to interpret the wars and the solitudes of the

flesh.”

-Allen Ginsberg

 

 

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