Record your expenses
The first step in saving money is to find out how much you spend. Track all your expenses. Once you have your data, organize the numbers by categories, such as gas, groceries and mortgage, and total each amount. Consider using your credit card or bank statements to help you with this.
Make a budget
Once you have an idea of what you spend in a month, you can start organizing your recorded expenses into a workable budget. Your budget should describe how your expenses match your income – so that you can plan your spending and limit overspending. In addition to your monthly expenses, be sure to include expenses that occur regularly, but not every month, such as car maintenance.
Plan to save money
Now that you’ve made a budget, create an economy category within it. Try to save 10 to 15% of your income. If your expenses are so high that you can’t save much, it may be time to cut. To do this, identify non-essential items that you can spend less on, such as entertainment and meals, and find ways to save on your fixed monthly expenses.
Tip: Consider the money you put into savings as a regular expense, similar to groceries, to reinforce good savings habits.
Decide your priorities
After your expenses and income, your goals are likely to have the greatest impact on how you allocate your savings. Remember to remember long-term goals. It is important that retirement planning does not get in the way of short-term needs. Learn how to prioritize your savings goals to get a clear idea of where to start saving. For example, if you know that you will need to replace your car in the near future, you can start saving money for now.
Make automatic savings
Almost all banks offer automated transfers between your checking and savings accounts. You can choose when, how much and where to transfer money or even split your direct deposit so that a portion of each paycheck goes directly to your savings account. Sharing your direct deposit and setting up automated transfers are simple ways to save money, since you don’t have to think about it and, in general, reduces the temptation to spend money.
Watch your savings grow
Review your budget and check your progress every month. This will not only help you maintain your personal savings plan, it will also help you identify and correct problems quickly. These simple ways to save can even inspire you to save more money every day and reach your goals faster.
