Saving money isn’t all about becoming the next Scrooge McDuck. In most cases, your savings are designed to help you get through tough times, cover unexpected mishaps, and eventually invest.
Whether you’re saving up to strengthen your emergency fund, for a big purchase like a new car or home, or to invest in your future or retirement, saving is an important step toward financial security and independence. Of course, as with any project, it can be tough to make progress without a plan. If you find yourself running up against the limits of your checking account each month or if you’re not sure where to get started when it comes to hitting your savings goals, these simple strategies can help you to become a savvy saver.
How to save more money
At its core, saving money operates under a simple principle: make more money than you spend. While that may sound simple enough, it can be difficult to spend less than you make. Strategies like using the 50/20/30 method, setting a firm budget, and cutting down on extraneous spending can help you save successfully and consistently.
Use the 50/20/30 budgeting method
The 50/20/30 rule has a simple premise. 50% of your income should be spent on necessities, like rent and food. You can spend 30% of your income on non-essential purchases, like entertainment and travel. The final 20% of your income should be allocated to saving and investing.
This balanced approach to spending and saving recognizes that non-essential purchases are part of life, while also emphasizing the importance of saving to improve your financial well-being and investing in your future.
Cut down on monthly subscriptions
Everything from TV shows to new underwear is now sold using a subscription-based model. While subscriptions can often provide a lot of value for the price, it’s easy to sign up for more subscriptions than you really need without realizing the cost.
To make sure you’re only paying for subscriptions you truly want or need, it’s a good idea to go through your billing statements each month and review which subscriptions are worth your hard-earned income. If you don’t have the time or inclination to comb through transactions, there’s an even simpler method: cancel your credit card and get a new one from your bank. Then give your new card info to the subscriptions you plan on keeping.
Use a budgeting app
If you’re having trouble hitting your savings goals each month, a budgeting app can help you stay on track. Budgeting apps like You Need a Budget and Mint allow you to take control of your finances, analyze your spending, and come up with a plan to save.
Your budget can be as simple or complicated as you want. Whether you want to stick with a tried-and-true ratio like the 50/30/20 method or want to track your spending categories in granular detail, budgeting apps accommodate a wide variety of budgeting styles. The most important thing is to stick to it and commit to saving.
Increase your earnings
When it comes to budgeting and saving, most people focus on reducing their expenses to increase their savings. While this is a sound strategy, it can be difficult to reduce your expenses when money is already tight. Since saving money involves spending less than you earn, increasing your earnings is a great way to hit your savings goals.
You can increase your earnings using several different methods. You may want to seek a raise or promotion at work or apply for jobs in your field that offer a higher salary. You can also start a side hustle in your spare time or get a part-time job. Sometimes, increasing your earnings can be as simple as selling stuff you no longer need. Every extra dollar you earn is money you can put toward your savings goals.
Avoid lifestyle inflation
When you increase your income, it can be tempting to increase your spending along with it. While it’s okay to treat yourself when your hard work pays off with a promotion, new job, or lucrative side hustle, try to keep your basic expenses in check and avoid lifestyle inflation. This can help ensure you’re still hitting your savings goals each month and not living above your means.
What did we learn?
Saving money can seem overwhelming if you don’t know where to start, but with the help of a few simple saving strategies, financial success is within your reach! By setting a budget, reducing your expenses, and increasing your earnings each month, you are working toward a brighter financial future. Once you’ve mastered saving, the next step is to make your money work for you! Investing your savings using a tool like Beanstox can help you grow your wealth, invest in your future, and improve your financial health.