There are many things that may come to mind when we think about money. Saving, spending and earning money are the most popular things people may first think of, but each of these areas get impacted by one thing, debt. “The average American debt (per U.S. adult) is $58,604 and 77% of American households have at least some type of debt.” (Lampo Licensing, 2022). At Skyline Hills Financial, we understand how important your finances are and make it a priority to be a resource in order to help you achieve your financial goals. Here are 5 easy tips to help you start saving money.
1)Make A Budget
As simple as this may sound, there are a lot of individuals out there who do not have a budget. Budgets are important to help you keep track of your short term and long term bills/spending. Knowing how much you spend and where you spend your money is a crucial part in becoming more financially literate. How are you supposed to save money if you do not know how much you are spending? Starting a budget is a simple and easy starting point in achieving financial freedom. Your budget should outline how your expenses measure up to your income. First, you need to know how much money you are earning each month. Then you will need to write down expenses such as: rent, insurance, car payments, gas, food, etc. in order to see how much money you are spending. After that you will need to decide how much money you want to spend after your expenses, and how much money you want to save. A good rule of thumb is the 50/30/20 rule which is where you divide your monthly income in 3 different areas: 50% for essential purchases, 30% for additional non-essential purchases, and 20% for savings. Being as strategic as you can in creating your budget leads to better spending habits which in turn sets yourself up for success in the future.
2) Lower Credit Card Usage
A credit card can be very beneficial in many ways involving your financial situation as long as you are using it correctly. Some people who own a credit card use it for every purchase until it gets declined. In the moment it may be a nice thing to have, but by doing this you are putting yourself in a position to increase your debt. If you get a credit card, start off slow and start off smart. Use it for manageable purchases to begin with and make sure to keep the amount you spend low. This will not only help with saving, but also with your credit score. A lot of people who are financially stable typically only use credit cards for emergencies or when they absolutely need to. You do not want to reach your spending limit on your credit card. This leads to a cycle that costs many people which is where they get a paycheck and put a major portion of it towards paying off that debt every time they get paid.
3) 30-Day Rule
This great tip is very beneficial, but it also takes quite a bit of self control. If you see an item you would like to purchase, don't buy it right away and instead wait 30 days. If you forgot about the item in 30 days, did you really need it at that moment? Most likely not. If you wait 30 days and still want the product or service, making that purchase will be much less impulsive. This little tip will help you learn to decipher between your wants and your needs. This is also a good way to save money because it will limit the “in the moment” items you are purchasing. Remember, every dollar not spent is a dollar saved.
4) Make Savings Goals
Goals are critical in almost every aspect of life especially when it comes to money. Making savings goals is an extremely smart thing to do financially. Start by making a few short-term goals and a few long-term goals. An example of a short-term goal could be saving $100 every paycheck to go towards a vacation or item you want in the near future. An example of a long-term goal could be saving a certain amount of money each check for years so you can buy a house or retire quicker. Short-term goals are not only very important to have, but also to achieve. This has many beneficial outcomes such as better financial freedom, a small psychological boost and more all while working towards obtaining your long-term financial goals.
5) Cut your spending
This tip will vary from person to person depending on what you spend your money on and your current situation. One thing that could be beneficial for everyone could be to go through all your current subscriptions and cancel ones that you are not using. Why pay for a subscription or a service if you are not using it? You are wasting your hard earned money at that point. Another good tip for trimming your spending could be limiting how much you spend on eating out. Try not to go to restaurants or fast food places more than once a month and see how big of an impact this will have on your budget. By avoiding unnecessary purchases, you will start saving much more than what you realize.
While some of these tips may seem simple, they truly have a lasting impact on your finances. Taking the right steps towards saving money begins with being organized and strategic about your financial situation. If you are wanting a better financial future, there is no better time to start than now.