1. Plan Your Budget
It's tough to save if you don't know where your money really goes. Build a budget to get your finances under control, so saving becomes easier. You can start by subtracting your monthly expenses from your income for a quick financial snapshot. Then allocate portions of income for spending and saving, making any adjustments needed to help bring goals within reach. Because it can be difficult to follow a cash trail, consider using your debit and credit card so you can monitor and track your spending in online banking.
2. Pay Yourself Before Paying Bills
It can be difficult to save when it seems like nothing is left after you pay all the monthly bills. Break that cycle by making a firm decision to pay yourself first. Even if it's only a small amount, commit to putting something into savings before paying any other bills or expenses. You'll be amazed what a difference this small change in perspective makes to your savings balance over time.
3. Automate the Process
The best way to “pay yourself first” and increase your odds of savings success is by setting up an automatic savings plan at your bank. You can transfer an amount of your choosing from your checking account to your savings account each month. You likely won't miss what was never available to spend. It's helpful to open a separate savings account solely for this purpose, so savings grow uninterrupted.
4. Trim Expenses
With a little creativity, you can cut back without taking the fun out of life:
- Check out free and low-cost programs at neighborhood schools, libraries and houses of worship.
- Explore free hiking trails, parks and beaches.
- Hold a potluck dinner party, and invite friends to bring forgotten nonperishable food from their cabinets.
- Curl up with loved ones for movie nights at home.
- Rather than purchase expensive prepared foods, buy fresh ingredients and cook delicious, cheaper meals from scratch. Prepare large quantities and freeze portions so that convenient, economical meals will always be available when you're tired, stressed or hungry.
- Take lunches to work instead of buying your meals.
- Buy nonperishable food in bulk, and choose generics when possible.
- Avoid buying bottled water.
- Consider cutting cable and opting for a less expensive streaming apps.
- Find bargains and adventure at local yard sales and consignment shops.
5. Raise Extra Cash
Obviously, earning more income is another way to supplement your savings. If possible, find additional work that leverages your interests. If a second job isn’t for you, you might also consider selling unwanted household items online or via a yard sale.
Budgeting and saving takes just a little bit of planning and discipline, but the effort truly pays off. As your nest egg grows, you'll be in a better position to achieve dreams such as homeownership or travel while being prepared for unexpected events that require additional funds.
Contributed by Roberta Pescow, NerdWallet
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