If there never seems to be any money left over to save each month after you pay your living expenses and debts; it could be time to learn how to save with more effective methods. Many Americans make the mistake of trying to save the money “left over” after paying for their obligations – but the majority of this group find out there is never really any cash left over to save with this method.
Here are some strategies that will help you learn how to save:
Analyze Your Current Lifestyle
It’s possible that you are spending more than you can comfortably afford to spend, on a consistent basis, and that is the result of running out of money before you deposit some into savings accounts. The only way to figure out if this applies to you is to carefully analyze your current lifestyle.
Keep a notebook in your pocket or purse for three months, and write down every penny you spend. Don’t attempt to limit your spending during this analysis stage – the idea is to live your life normally, but to keep an accurate record of all outgoing money. Also during this time, keep track of any money that comes in – whether it’s your regular income source or something unusual – like a birthday gift.
After three months of noting your spending habits, take time to carefully analyze how you spend your money. It may help to circle everything that is unnecessary with a colored pencil, or to categorize your spending to see which items are necessary living expenses and which are desired expenses for your lifestyle (like your gym payment, cable television package, or daily lunches from a restaurant). Chances are, you will find a number of purchases on the list that you don’t even remember making, and quite
a few you wouldn’t miss if you eliminated. Maybe you will also find you earn less than you actually thought you earned – which can be an eye opening experience!
Create or Adjust Your Budget
Use what you learn about your spending habits to make adjustments to how you manage your money. The money you save by eliminating unnecessary spending and being more mindful about where your money goes can then be used to pay down debts and contribute to savings.
You can further increase your savings by learning to use coupons when you shop or switching to generic brands when they are less expensive and work just as well as the more expensive brand-name product.
Compare Savings Rates
Once you have found where your money is going each month and have eliminated most of your unnecessary spending, you will want to take time to research and compare savings rates before choosing where to save your money. Set up an interest-bearing savings account that you can automatically deposit a percentage of your income or a set amount on a consistent basis. Once you
have a decent sum of money saved, you can start using certificate of deposits to take advantage of higher CD rates for the money you save. The most important aspect to learning how to save, is learning how to make the process automatic – and paying yourself before you pay for the rest of your life – otherwise the money will be gone before you ever save it.
“Finance” stock photography courtesy of Shutterstock