Saving money is a problem that over 90% of the US population needs to address and I will give you my best tips to solving this issue.
- MAKE A BUDGET. This is number one because if your monthly expenses are more than your monthly income there won’t be any money left to save! You must make a budget and look over your expenses to see which ones you can eliminate to make the gap (difference between your income and expenses) as big as possible. Keeping expenses down is huge!
- PAY YOURSELF FIRST. After creating a budget you will now know how much excess money that you have left after paying your mandatory expenses. Now you just need to switch up your thinking. PAY YOURSELF FIRST each and every month. Treat your savings like you would a mandatory bill and pay it first before paying anything else. People have hardest time grasping this concept in particular because they want to pay their bills prior to paying their savings account. But if you adequately budget, after paying yourself you should have plenty left over the rest of your expenses. If you pay yourself last, you WILL come up with excuses as to what else you can use the money for.
- AUTOMATE. People believe that saving is all about the numbers but I believe its more physiological than anything. We associate putting money away for savings as “losing” money, when in fact it is the polar opposite. You are putting money away for your future self. So what I’ve learned from advising clients is the old rule “what you don’t know cant hurt you”. So by automating your savings you don’t even realize that the money is gone. If you get paid on the 1st of the month, have it set up where your savings amount is automatically deducted that same day so you never get a chance to have the money in the first place. This is why 401k accounts are so successful. The money is taken out of your paycheck before you even see it and after months you forget that you’re even savings!
- LEAVE IT. Remember, taking from savings is a poor persons habit. After, saving this money the key to it growing is to not touch it. Saving in bank separate from your checking account can be a huge help. If you save at a bank that with no linked accounts you will be less inclined to transfer money back out. The though of having to leave the house and physically go to the bank to remove funds should deter you from making this mistake. You should have an emergency fund separate for unknown expenses but your savings account should be for deposits only!
- BONUS. You should now think about investing. Savings accounts have poor interest rates and you at least want to keep up with inflation so your money doesn't lose value. Educate yourself first of course or look into finding a financial advisor.
Now that the secret is out, go tell as many people as you can!!!!