Do you have trouble saving money? If you are looking to increase your extra cash flow, whether that is to build an emergency fund or to put money into investments for retirement, there are easy ways to put money away. As I have often mentioned, saving money can be difficult at times. With the economy the way that it is, it may be hard to make ends meet, let alone save extra money on top of that.
Why Save Money?
One of the reasons why people struggle with saving money is that they aren’t motivated enough or don’t understand what it offers them. If you fail to see the purpose of saving money, you are going to have a difficult time motivating yourself to follow through. Otherwise, when you are enticed with the latest apple product or a nice getaway for your anniversary, you are no going to be able to say no to your impulse to spend. While I can’t answer the question “Why should I save money?” for everyone, I can fill you in on why my wife and I put a priority on savings.
Saving money for us is all about what it offers us. Saving money early in your life gives you a lot of options and flexibility later in life. By saving now, my wife and I have the option of retiring early. Instead of having to play catch up later, we would rather be really aggressive in our savings in order to have options later. Too often we see our friends and family splurge one too many times and feel a lot of stress about how they are going to pay their bills. We never want to experience that and by saving extra money, we are able to cushion ourselves from this paycheck-to-paycheck lifestyle.
Practical Ways to Save Money
The other reason why people often fail to save money on a regular basis is because they have failed to create a system that works for them. People often make saving too difficult, requiring a lot of steps. No wonder why someone would just give up. Instead, my wife and I like to keep it simple. I’m not going to suggest that everyone follow the same system that we use and for that reason, I have come up with various other ways to save money that require very little effort.
Piggy Bank: Have you ever had a large piggy bank or container to collect your loose change at the end of the day? Or do you lose track of the coins that you get back from making everyday purchases? An easy way to save money is the have a container to collect your coins. The best thing to do is to keep it in a place that is convenient for you, but not out in the open where you will see it all the time. Having this extra money sitting around may be too tempting for you and make you feel entitled to spend it on a item that you “need.”
Only Spend What You Need, Save the Rest: This is the plan that my wife and I use and won’t work for everyone. What this requires is a strict policy that you don’t buy things you don’t need. We make occasional exceptions, but are very intentional to not let ourselves get carried away. The benefit of this way to save money is that you don’t have to obsess about meeting certain figures. Not thinking about it (and putting it out of sight in a different savings account) is a great way to accumulate money. While it sounds like more work to control your spending, once you buy into this idea, it is merely a matter of asking yourself if you really need it.
Pay Yourself First: Another easy way to save money without the pain of counting nickels and dimes is to immediately transfer the money after your paycheck. It can be a set amount or a certain percentage of your check, but the important thing is to consider it automatic. If you think of it as a mandatory bill, it is easy to build up a large amount of savings with little effort.
Learning how to save money is an important step in successfully managing your finances. Learning why many people fail to save money and how to motivate yourself are the first steps. After that, you have to figure out what works for you. It doesn’t have to be complicated, but it should be YOUR way to save money.
I definitely practice the “pay yourself first” principle and it’s very effective for me. I like to save and I like the feeling of knowing that money is going directly into my savings account. In my mind, it’s the most important “bill” I pay.
For me, setting up an automatic savings transfer is what has helped me the most. If it’s automatically going to come out of my checking account each month, it becomes a bill that I have to pay. I don’t have the option of making excuses or putting it off until next month. I just have to remember to increase the transfer amount when my income increases. I’ve also been trying to get better at only buying what I really need.
I love the pay yourself first mentality and the only way I used to be able to save was by contribution to the 401(k).
It wasn’t until I actually started to budget and learn to live on less than I make that I was able to build a stash of cash.
Paying yourself first is the best way to save money. Otherwise it seems that there is always something you need to spend the money on.
While I am still in school and our paycheck doesn’t cover expenses it is hard to pay yourself, but I hope to implement that once I can.
That piggy bank suggestion works. We had a water jug in our apartment when we were young that held all our loose change. By the time I got married, it had over $200 in it – which went towards the honeymoon!
Congratulations. Very interesting. I am insisting on my blog that is important to save. In that sense, this article gives some great ideas. But it is also very important to invest, but investing it. Yields 4 to 5% annually, as long-term goal is no longer enough. It is not sufficient to generate an adequate retirement pension. It is not enough to increase our personal wealth. Not enough to generarnos significant additional income. The answer lies in investing more and be near our investments.
I could never just buy what I “need” and save the rest. Life would be way too boring.