Saving money is often easier said than done for many people. Once you get the wheels in motion, however, you will be able to start working toward your savings goals. What can you do to start saving money?
- Monitor Your Expenses
If you do not know how much you spend, you are in good company. Track your expenses as a first step so that you know how much money you are spending each month. Include even the smallest expenses as you monitor your spending over the next month.
- Adjust Your Budget
After you know how much you are spending, create a functional, realistic budget. Use your actual expenses as well as an estimate for your targeted monthly savings.
- Reduce Spending
Now is the time to identify areas where you can cut back. For example, you can stop going out to eat to eliminate that expense from your budget. Other ideas are to cancel subscriptions, switch to generic groceries and reduce your cable and cell phone plans.
- Create Goals
Are you saving for a big vacation, the kids’ college expenses, a new house, or something else? Often, people save for multiple things at the same time. For each goal, assign a timeline. Then, determine how much money you need to save each month to meet each individual goal.
- Set Priorities
Some goals are more important than others. If you cannot meet all of your goals on the timeline that you established, push back lower-priority goals. For example, paying for the kids’ college expenses may be more important than going on vacation.
- Choose Savings Vehicles
There are various savings vehicles that you can choose to use for your efforts. Savings accounts are the traditional option. You can also use CDs, a retirement account, mutual funds and stocks.
- Automate Your Efforts
Once you know how much you can save and what type of vehicle you are using, automate your efforts. Simply set up an automatic funds transfer so that you can take a hands-off approach to save money.
- Check Your Progress
Staying motivated to save money can be challenging. You may be inspired to stay the course if you track your progress. Review your progress across all of your accounts monthly.
Starting to save money is often a struggle. However, once you have forward momentum, saving regularly is relatively easy to do. Focus on these steps to get started today.