Everyone knows that they should save money, but saving money can seem impossible. However, learning how to save money step by step, day by day, is significantly more possible. Achieving financial stability for your wedding, your children’s college expenses, your retirement or any emergency expenses you may need to cover gives you a huge advantage.
Even if you think you might not have enough money to pay your bills, you can start saving to secure a better financial future. These nine money-saving tips on saving money every day are perfect for anyone wondering how to start saving money.
Tip 1: Prioritize Your Spending
Determine what financial goals mean the most to you and create separate accounts for each goal. For example, devote a fund to your retirement and another to your emergency savings. Ensure each fund gets an appropriate amount of money added to it each month based on your total saved income. Making them all separate accounts from your checking account can prevent you from spending your saved money accidentally.
Tip 2: Use Cash
You are more tempted and likely to overspend when you use your credit card instead of cash, according to many studies. Seeing your cash disappear as you spend it can remind you that your funds are not unlimited whereas credit cards may let you forget about how much you are spending. Nevertheless, keeping a credit card in your wallet or purse for emergencies or times when you need to make a larger purchase is wise.
Tip 3: Automate Everything
Financial technology consists of programs, sites and online assistance that can make managing your finances easier. Your bank likely offers an online banking service for free that can perform many of the same functions your actual bank can. Setting up automatic payments and withdrawals can make your finances almost manage themselves!
In addition to the convenience that automated payments can provide, several businesses will provide discounts to an account while autopay is active. By reducing the cost of your expenses, you will have more that can be allocated towards your savings.
Additionally, you can typically set up direct deposits into different accounts of your choice for your paychecks and extra income. Although, you are advised to check to ensure that payments have been made and processed on time when possible as errors can still occur.
Tip 4: Start Getting Points
Some credit and debit cards offer users award points for using the cards to make purchases, so consider finding a card that offers award points. Essentially, award points are free money that lowers your balance or gives you cash back at certain businesses. Consequently, the points can save you hundreds of dollars in hotels, airfare, restaurant bills and more once you accumulate enough points.
Learning how the points system works may take some time, but it can be worth it if you have a decent or good credit score. When selecting a rewards credit card that’s right for you, it is important to consider the following factors:
- The type of purchase that you must make to earn rewards.
- The percentage of “cash-back” or reward points that you will receive.
- The number of points you need before you can cash out a rewards balance.
- The interest rate of the credit card.
- Whether or not the credit’s cards reward features diminish over time as an introductory period expires.
While rewards cards are a fantastic way to save on the purchases that you already make, it can be easy to forget how much money you are spending. Therefore, consider only using your card for routine purchases or payments, such as for groceries or gas, and not for extra expenses or splurges.
Tip 5: Tax Yourself
Imposing a type of luxury tax on yourself by adding the equivalent of a luxury item’s purchase price to your savings account can save you tons of money. It can also dissuade you from buying luxury items if you might not be able to afford to add money to your savings, too. Although, this method of taxing yourself may be a bit extreme for some.
Another way to tax yourself is to round up on luxury purchases and put the difference into your savings. For instance, a new TV may cost you $147, but you can round up to $200, adding the $53 to your savings.
Some bank accounts provide savings features that act in a similar way. The most common rounds up the cost of your purchases to the nearest dollar and distributes the change into your savings account. Consider utilizing this feature if it is one that your financial institution offers.
Tip 6: Save on Household Costs
Cutting back on your housing costs is a simple way to save money. You can seal drafty doors or windows, conserve water and upgrade your home. Using more energy-efficient lightbulbs, air conditioning or heating units and windows with sun and UV protection or extra windowpanes can save you a lot of money in the long run. Finally, you should avoid wasting energy in unused rooms by turning off lights, reducing heating and cooling mechanisms and performing other measures.
Tip 7: Look into Your Subscriptions
If you have monthly or annual subscriptions to websites, newspapers, digital streaming services or anything else that you no longer use, cancel them. You may not even realize you are still enrolled in a monthly subscription plan to something, so check your emails, your bank statements and your mail. From magazines that are still being sent to you to traditional cable subscriptions for hundreds of channels you never watch, unused subscriptions could be slowly draining your finances. Evaluating your subscriptions is a great way to save much-needed money without even having to adjust your daily spending or saving habits. While canceling subscriptions does not guarantee you a big financial bonus, it can enable you to save a bit of extra spending money every month.
Tip 8: Consolidate Your Loans or Refinance Your Mortgage
Credit card debt and student education loans can cost you a fortune, but consolidating all your loans can lower your interest rates and make the payment process simpler. Depending on the initial interest rates of the loans and the new interest rate at the time of consolidation, you may be able to save a significant amount of money by consolidating your loans. Similarly, if you have a mortgage, refinancing your loan to find a better interest rate or lower monthly payments may be a wise decision.
Tip 9: Get a Second Job
Working a part-time job, or even a full-time position in addition to their current job, is a great way for anyone to supplement their income. If you have enough time after working your primary job to devote to a second position, or side gig, then you are encouraged to so. Working weekends, nights or early mornings are options for busy workers. Many retail, foodservice and remote jobs have flexible schedules to accommodate you.
Additionally, the second job may be added to your resume to help diversify your work portfolio, help you pursue a hobby that you love or introduce you to new professionals in your area. Whether you use your second job to secure new work opportunities, to earn a few extra bucks or both, getting a side gig is beneficial.
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