1. Figure Out What Your Actual Income Is
If you sit down and add up all of your monthly expenses, then subtract that from your monthly take-home pay, you might be surprised at how much discretionary income you actually have. Most people don’t even do the math, so it just feels like things are tight, when in reality, they have a lot of extra money that they’re just not managing well.
2. Recognize That It Doesn’t Take Much
A lot of people are under the impression that “saving money” means setting aside a high percentage of their weekly pay, which usually isn’t something they can afford. That thought alone is enough to frustrate someone to digress into an attitude of “since I can’t save a lot, I just won’t save any at all.”
Before you go into a savings plan, recognize that saving money is often just one small step at a time. In fact, financial advisors will tell you that the earlier you start saving for retirement, the less you need to put away every week. Someone in their mid-20s who starts putting $25 every week into an investment account can count on being close to (if not over) the $600,000 mark by the time they’re ready to retire.
3. Cut Costs Somewhere and Put the Savings Away
You don’t necessarily need to cut into the excess income that you already enjoy; instead, find an area where you can cut costs. A fairly typical recommendation is coffee; so instead of getting coffee four times a week, get it once. Better yet, make it at home for about 10 cents per cup.
4. Set Up Automatic Savings
Almost all online banking systems have functions that allow you to set up automatic transfers that will send a certain amount of money every week from one account to another.
8. Pay Off Your Credit Card
If you’ve been carrying a balance on your credit card, now is the time to pay it down and eliminate your monthly payment. Not only will the monthly payment be off the table, but the interest you’re paying on what you owe will be a thing of the past as well. If you can afford to, pay it all off at once and leave the credit card alone unless it’s an emergency.
If you’re able to do that, you’ll save money every month by default, simply because you don’t have to worry about those payments. Take that sum (whatever it might be) and put it in a short or long term savings account.