Saving money doesn’t mean cutting out everything you love — it just means spending strategically and making small, gradual changes that will add up quickly! Whether you are trying to save for an emergency fund, pay off debt, or reach a financial goal, here are some smart ways to increase your savings each month without feeling deprived or making huge sacrifices.
1.Track Your Spending
The first step to saving is knowing where your money goes. Trace your expenses in a budgeting app, spreadsheet, or just a simple notebook. Once you recognize your spending pattern, you will quickly be able to identify opportunities to cut unnecessary expenses (think of that unused subscription or that multiple takeout in a week!).
2.Set a Monthly Budget
Once you have identified some of your spending habits, create a budget that you feel comfortable and can stick to, while remaining in line with your financial goals. Create categories for bills, savings, groceries and fun money (or whatever works for you). A practical budgeting method that people have found helpful is called the 50/30/20 rule.
50% needs
30% wants
20% savings and debt repayment
3.Automate Your Savings
Consider your savings as an expense that you cannot compromise. Set up a direct deposit at work or an automatic transfer to your savings account on payday when it is removed from your spending account budget. It doesn’t have to be much – even $50 a week will allow you to accumulate some significant savings over time. Automation makes saving relieving, eliminating the temptation to spend in its place.
4.Eliminate Unused Subscriptions
Streaming services, apps, memberships, etc. can eat into your wallet without your knowledge. Track your recurring payments and examine what you have paid for the last six middle months to determine which subscriptions you haven’t used. You can save hundreds, and some even thousands of dollars a year by simply trimming unused subscriptions.
5.Cook at Home
When budgeting, a significant portion of your spending could be your regular habit to dine out. Try meal prepping, grocery and supermarket programs, and batch cooking to save time and money eating at home. Meals you prepare at home are typically better for your family and far less expensive!
6.Utilize Cash Back and Membership Rewards Programs
When shopping, use cashback credit cards, rewards apps or programs, or similar. Just be sure to pay off your balances in full each month before interest and due dates accumulate, negating any savings.
7.Make Smart Purchases
To help you reduce impulsive shopping behavior, plan out what you will be purchasing or need before going shopping. Use coupons, price check online or in store, and buy items on sale. Also consider generic brands, which can often save you a considerable amount money while still providing quality items.
8.Lower Utility Costs
You can save a lot on utilities with some minor changes! You can unplug any electronics when they are not in use, switch to LED bulbs, wash all laundry in cold water, and adjust the thermostat slightly lower in the winter and slightly higher in the summer.
9.Review Both Insurance Policies & Service Plans
You may have been overpaying for your car insurance, home insurance, or your phone plan. Price checking to see if you can receive better rates or bundling them is a good idea. A couple of phone calls can save you hundreds of dollars throughout the course of a year!
10.Have a Savings Purpose.
Having a purpose – a new home, travel or getting to a certain amount saved in your “rainy day” fund – will help keep you motivated. Check in with your progress, and periodically change your budget to make necessary adjustments.
How to Build an Emergency Fund
Life is full of surprises — some nice and some not so nice. Emergencies can happen anytime, from unexpected medical bills, losing a job, paying for car repairs, or other things that depend on the situation. An emergency fund is a financial safety net that allows you to be ready for these uncertainties without going into debt or spending hours worrying about your finances.
To build an emergency fund may feel challenging, but with a plan and commitment, anyone can do it. Here is a list of steps to help you begin building your emergency fund and expand it.
1.Know That You Need an Emergency Fund
An emergency fund is money set aside for unplanned, immediate expenses that must be paid, not for vacations, or new cell phones, or new appliances. You may see it as financial self-insurance.
Without an emergency fund, you will need to pay with a high-interest credit card, or a loan, or you may even have to use your retirement funds. Having an emergency fund gives you peace of mind and allows you the financial freedom to react and make good decisions during difficult times.
2.Set a Realistic Goal
The general rule of thumb is to save three to six months of living expenses.
You will start by calculating your monthly essentials such as housing, utilities, food, transportation, insurance, and debt payments. The total of that number multiplied by 3–6 is your ideal months of expenses.
If your typical expenses per month are $2500, then your goal for your emergency fund is in the range of around $7500 to $15,000.
If this number appears daunting do not want, you can start small- anywhere from $500 to $1,000 can be very impactful in covering important costs during an emergency.
3.Start Small and Stay Consistent
Emergency funds are built over time, not over night. The most important piece of this is consistent saving. Start saving a flat fee each month beginning with whatever is comfortable. It could be $50 saved each month or $100. It will add up over time.
Here are some ideas to utilize:
Automate your savings: Automate your transmission from your checking account to your savings account every pay period.
Save windfalls: Deposit your tax refund, bonuses or gifts directly into your emergency fund.
Cut small lifestyle habits: Brew coffee more at home, try cooking more meals at home, cancel any unused subscriptions and add the savings into your fund.
4.Where You’ll Keep the Fund
To keep your emergency fund in the right place, it should be safe, liquid(able to use whenever you want) and separate from your normal spending money. The best ways to keep a fund are:
High-Yield Savings Accounts- You will have a liquid account generating interest.
Money Market Accounts- A step up that will require a little more of a deposit but can generate a little interest while still being an accessible account.
Do not invest your emergency fund into stock or volatile assets where the value can go up and down on a daily basis. You will want to be totally safe not to mention stress free.
5.View It As A Safety Net, Not A Spending Account
Only use your emergency fund for real emergencies. For example, these would be:
- Job loss or income reduction.
- Significant medical or dental expenses.
- Emergency house or car repairs.
- Unexpected trips for family emergencies.
Once you take money out of your emergency fund, your priority should be to add it back in again. You can think of your emergency fund as borrowing from yourself and your goal should be to repay yourself as soon as you can.
6.Reassess and Adjust As Life Changes
As your life changes – new job, family, house, or increased expenses – your emergency fund goal should also change. Make sure you look at your savings at least yearly and adjust your contributions, if necessary.
To Wrap Up
Having an emergency fund is about habit and not just saving money. An emergency fund also provides a feeling of peace and building financial security and freedom. Once you prepare for the unexpected, stress will lessen and you will have more control over your financial future. Start small and add to your savings regularly and you should see your emergency fund grow. Having peace of mind is still one of the best investments you can make!
