Sometimes the hardest thing about saving money is just getting started.
This step-by-step guide on how to save money can help you develop a simple and realistic plan to save for goals, big or small.
1. Record your Expenses
The first step to saving money is to figure out how much you spend.
Keep track of all your expenses—that means every coffee, household item and cash tip.
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.
2. Make a Budget
Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget.
Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending.
In addition to your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance
3. Choose Something to Save For
One of the best ways to save money is to set a goal.
Start by thinking of what you might want to save for—perhaps you’re getting married, planning a vacation or saving for retirement.
Then figure out how much money you’ll need and how long it might take you to save it.
4. Make Saving Automatic
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 a portion of every salary goes directly into your savings account.
Splitting your direct deposit and setting up automated transfers are simple ways to save money since you don’t have to think about it.
It generally reduces the temptation to spend the money instead.
5. Decide on Your Priorities
After your expenses and income, your goals are likely to have the biggest impact on how you allocate your savings.
Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs.
Learn how to prioritize your savings goals so you have a clear idea of where to start saving.
For example, if you know you’re going to need to replace your car in the near future, you could start putting money away for one now.
Do you want to live the wealthy lifestyle that you’ve always wanted?
Wealth is more than just financial freedom, but a balanced relationship between health, time and money.
