Money Saving Tips
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- To save money, take a look at your spending and see if there are any areas where you can limit spending.
- Consider whether your money is in the right place and review interest-bearing bank account options.
- If you are saving for a specific purpose, set practical goal guidelines.
Whether you’re just starting to save money for a emergency fund or ready to save for a down payment on a mortgagereviewing your savings habits can be critical to maintaining your financial goals.
If you’re not sure how to save money quickly or have had trouble saving in the past, here are eight tips from financial experts you can use.
1. Track and Evaluate Your Spending
To start saving money, you must first see where your money is going.
“Often people find it hard to save because they’re trying to save after taking care of so many expenses: after paying the mortgage, rent, car payment, shopping, etc. They realize they may not be able to save.” I always suggest tracking your spending because that helps you identify money that can be saved,” says Patrina Dixon, CFEI and owner of P. Dixon Consulting, LLC.
You can keep track of your monthly expenses in a budget appa personal finance software program, or a notebook. Some expenses will be necessary to cover every month, such as rent or utility bills; these are considered essential expenses. Non-essential expenses are things that you don’t necessarily have to pay every month and depend on your desires, such as entertainment and eating out.
Evaluate your spending to see if there are specific categories where you can make some monthly adjustments. You might also consider learning about the budget rule 50/30/20 or the budget rule 70/20/10.
If you’re looking for ways to cut your grocery bills, Dixon suggests planning shopping trips ahead of time so you get everything you need at once. It could also be useful for saving gas if you normally make frequent trips to the supermarket or don’t live near grocery stores.
3. Look for ways to enjoy small pleasures but at a reduced price
Cutting back on non-essential expenses doesn’t necessarily mean you have to cut out the things that bring you joy. Instead, Dixon recommends reducing how often you make that particular purchase.
For example, let’s say you’re a gourmet coffee aficionado. If you buy gourmet coffee at a coffee shop every day, you could alternatively go once or twice a week and add more to your savings.
4. Review the different savings account options
High Yield Savings Accounts, money market accountsY CD They are all interest-bearing bank accounts that can help grow your money.
High-yield savings accounts are similar to regular savings accounts you’d find at traditional banks, but they offer more competitive interest rates. money market accounts They are different from high-yield savings accounts and CDs because they usually come with a choice of paper checks, ATM cards, or debit cards. With a CD, you’ll secure money for a specified term and earn a fixed interest rate. The best savings account option it will probably depend on when you need to access your money.
Scott Stanley, CFP and founder of Lighthouse Wealth, recommends setting up an automatic transfer from your checking account to a high-yield savings account after each paycheck. That way, you will be saving some money efficiently.
5. Make sure your checking account is being used correctly
The purpose of a check account is to manage daily expenses.
“Most of your direct deposits can go in there so you can pay your car payment, your rent, your mortgage, whatever various bills you have to pay,” Dixon explains.
You will want to keep your short-term savings for specific goals and emergency funds in a separate account. Stanley also points out that he will probably get a higher interest rate with a high-yield savings account than with a checking account.
6. Establish practical guidelines for specific objectives
Maybe you want to save for a particular financial goal, like a vacation or a new car.
To help make your goal more tangible, Stanley says you can estimate your goal expenses and set a deadline. Then he can review his budget and see how much he can set aside each month to make the goal more tangible.
If you realize your goal may be challenging to save, you might consider resetting your expectations by extending your schedule or selecting something more cost-effective.
7. Consider having a separate account for a specific purpose
If you want to track your progress toward a specific financial goal, you may want a savings account with budgeting tools. Some high-yield savings accounts allow you to tag and track goal progress. Another option is to open a secondary savings account to track your progress.
8. Review your budget routinely
If you’ve been keeping up with a consistent budget, check your progress. If something doesn’t go as planned, you can always change it. You will also want to make adjustments if you have recently got a raise or bonus.