Did you know that almost 70% of Americans have less than $1,000 saved up? If you find yourself in this situation, then having money for retirement or cash stashed away for an emergency could be a big problem. Therefore, it is important that you start to save today. Here are 10 tips that may help you save more cash.
Tips to Reach Your Savings Goals
- Pay Yourself First
When you get your paycheck, chances are you use that money to pay your bills and buy groceries or maybe even splurge on something that you want to buy. The first thing that you should do is pay yourself first. Paying yourself first means putting away whatever money you can after you pay the must-haves. By paying yourself first, you are potentially creating a healthy saving habit that can help you for years to come.
- Prevent Impulse Spending
It does not matter how much money you make if you cannot control your spending. It's important not to spend more than you make if you want to save money. Yes, stores are usually designed to entice you to spend more money. However, you can use these tips to help potentially control your spending.
- Don't leave your credit card on file in any online store - By keeping your credit card on file, you make it too easy for you to buy something.
- Don't bring a credit card with you to the store - Again, a credit card could make it too easy to spend.
- Never buy anything the first time you see it - If you see something you want to buy, give yourself some time to wait and think things over.
- Shop from a List
You can potentially end up overspending even when you go supermarket shopping. Even if you overspend about $10 for each weekly shopping trip, you could end up potentially wasting up to $500 per year. That is why it is essential to shop from a list. When you shop from a list, you give yourself some discipline when you are going on your weekly shopping trip. Grocery stores are designed to make impulse buying easy. Stores will often use red signs to promote a "low priced" offer and use strategic positioning to attract your attention; for example, generally, items placed near the register are items the grocery store "wants" you to purchase.
- Avoid Using Your Credit Card Except for Emergencies
Credit cards make it potentially easier to spend money. However, credit cards can become a big trap when it comes to taking money out of your bank account. That's because credit cards can charge up to 29.99% interest. Therefore, you will want to avoid having easy access to your credit card. You may only want to use your credit card in case of an emergency. Doing this could potentially save you some big headaches down the road.
There's an old saying about borrowing from your future to pay for your present. It's easy to put purchases on a credit card and not really feel the sting of paying until, of course, the bill comes. Often that comes as a shock because you might not realize just how much you charged on your card.
A great trick to track your actual spending while "feeling" the sting of paying is to convert the money you have available for groceries, dining, and casual spending into cash. Every time you purchase something, use cash. You begin to ask yourself, do I really need "this item." Try it; it's a real eye-opener.
- Set a Savings Goal
One of the best ways to potentially achieve a high savings rate is to set a goal. When you set a goal, you begin to focus on achieving the goal. It is a good idea to figure out how much that you want to save in the future; from there, work backward and discover how much you need to save each week.
Let's say that you want to save $3,000 in a year. To reach that goal, you can deduce that to saving $250 per month. Depending on how you are paid, you could save $125 every two weeks or $62.50 every week to reach your goal.
- Avoid Trying to "Keep up with the Jones"
One way that people potentially get themselves stuck with limited savings is by overspending. And one of the reasons why people overspend is because they want to keep up with their neighbors. This is known as "Keeping up with the Joneses."
The problem with spending to keep up with others is that you don't know the financial situation of the people who live next door to you. Maybe they're deep in debt, and maybe they have an inheritance, won the lottery, the list goes on. Ultimately, there is always someone with more money than you, so trying to keep up only hurts you. Focus on your spending and savings habits and not on others.
- Cut Expenses
Let's say that you do not have money to save at the end of each month. Well, you can always try cutting expenses. It is a good idea to sit down and look at where you spend your money. The chances are that you can find a couple of areas where you can trim the fat. Challenge yourself to find a way to cut 10% of your budget and put it towards savings. Little things tend to creep up into spending. Do you really need the premium cable package? How much is your cellphone bill? Can you live without your premium $5 coffee every day? How about eating out during lunch? It might not seem like much, and it's easy to tell ourselves that "it's only a couple of bucks," but those bucks add up fast.
- Think Long-Term
Most of the time, people do not think long-term. This is especially true when we are younger. It is crucial to focus on long-term goals when it comes to savings. If you are 23 and want to buy a house at 30, you may need to start saving today.
A potentially useful way to think long-term is to plan as to how much money you want to have 5, 10, 15, and 20 years from now. This may help you plan to save for your long-term goals, whether it be an automobile, home purchase, or retirement.
- Use the 30-Day Rule on Non-Essential Purchases
Are you thinking of buying a $1,000 smartphone or a $300 pair of shoes? It is a good idea to take some time and think things over. It might help if you enacted a 30-day rule before purchasing any non-essential item. With the 30-day rule, you can give yourself some time to determine if that non-essential item is worth it. This may potentially help you save money and allow you to be more financially stable in the long term.
- Invest your Savings
Once you have some money saved, then you might consider investing it. Doing this could allow your money to make you more money potentially. Over time, your investments may compound and potentially let you get to your savings goals more quickly.
One of the easiest ways to invest is to place your savings in a low-cost index fund that tracks the S&P 500. Historically, the S&P 500 has returned about 9% a year. Of course, there's no guarantee, so if you choose to invest, do so wisely and talk to a financial advisor first. This may allow your money to potentially double at around every seven years.
The first step to potentially enjoying financial stability is to engage in regular savings. Start creating a savings plan, control your spending, and invest for the future. Over time, you may be surprised at how much you can potentially grow your savings.