Most of us have to save for the things really want out of life. Whether it’s a college fund, house down payment, pay-off credit cards, build a nest egg or take a dream vacation, a savings plan can help you reach financial goals faster. But getting started with a savings plan can be difficult to figure out. Here are 5 easy ways to start saving money:
1. Record your expenses
In order to start a savings plan you’ve got to know where your money is going. Make recording your expenses easy. Get a notepad or even an app on your smartphone to record your daily spending. Record every dime you spend for about a month. That means every coffee, lunch, snack, your mortgage, utilities, magazines or newspaper, lottery tickets, hair product…everything. Know where you are spending money. Once you have the data organize the numbers in categories of groceries, dining out, mortgage, entertainment, etc.
2. Spend Less
Now that you have a record of your expenses look for ways to spend less. Something that seems minor like a $3 coffee or frappuccino everyday can add up over 30 days – That’s $90. Cutting something small adds up. When you cut small items you increase savings. Look for non-essentials that you can spend less on – entertainment, eating lunch or dinner out. You will be surprised with how much extra money can be accumulated. Make a little extra dinner to take for lunch the next day, it’s that easy.
3. Set savings goals
Setting savings goals makes it much easier to get started. Pick a reason or several reasons you want to save money. And, remember a savings plan can also include something fun where you splurge on yourself. Decide how long it will take to reach each goal. Some goals could be:
- Emergency fund to cover at least 6-12 months in case of job loss or other emergencies.
- Down Payment for a Mortgage or a New Car
- Computer Equipment
- Entertainment System
- Designer Handbag
- Expensive Watch
4. Get a Savings Jar
Tip yourself at home. Stop spending $5.00 bills and instead stash them away in a jar at home. It’s like tipping yourself. Sit back and watch those $5.00 bills grow.
5. Save by Automatic Transfers
Once you cut non-essential items from your budget try to save at least 10-15 percent of your net income. It may be less or perhaps more than 10-15 percent, just start where you can but make it automatic. Saving money becomes much easier with automatic transfers. By moving money out of your checking account, you’ll be less likely to spend funds that you wanted earmarked for savings. There are many options for setting up transfers. You choose how often you want to transfer money and which accounts you want the money transferred between. You may even want to open a savings account at a separate bank. Having a savings out of sight of your regular bank may help make it easier to maintain.
Extra Tip – Move Your Savings Online
Consider using these FDIC-insured online deposits accounts for short and long-term savings goals like the following:
- An online savings account at that can be easily set up with funds coming from your regular checking account.
- A high-yield savings account, which has a higher interest rate like the Discover Online Savings that earns 5x the national average than a standard savings account.
- A bank money market savings account, which has a variable interest rate that could increase as your savings grow.
- A high-yield CD (certificate of deposit) which locks in your money at a specific interest rate for a specific period of time.
- FDIC-Insured IRAs, which are built for purposes such as retirement savings.
- Securities, like stocks and mutual funds. These investment products are available through investment accounts with Scottrade, a broker-dealer. Remember that securities, such as stocks and mutual funds, are not insured by the FDIC and are subject to investment risks including the possible loss of principal invested.
With these easy ways to save money, you can reach your goals faster.