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Do you live on a tight budget? Feel like saving is simply impossible? Don’t worry, we’ve all been there at one time or another. Regardless your budget, you can save money, and it can be quite easy when you implement effective money saving tips and strategies.
Ultimately, anyone can save money, but in order to maximize your savings potential, it’s important to first get your finances in order.
Check out these money saving ideas that’ll propel you toward your financial goals (potentially saving you thousands every year).
How to Save Money
In order to maximize your savings, you’ve got to lay a financial foundation. This includes getting a grasp on your income and expenses, creating a budget, automating your savings and maintaining your budget.
1. Calculate Your Expenses and Income
In order to maximize your savings potential, spend some undivided time on your finances.
If you’re on a salary, review your last pay stub and make note of the actual number that hits your bank account every payday. If you are paid by the hour, review one to two months of pay stubs to get an idea of how much you generally bring in.
Then you’re going to discover what all of your expenses are one by one. You can use a budgeting app to track your numbers, a spreadsheet, or an ol’ faithful pen and paper.
2. Create a Budget
Creating a budget is one of the best ways to manage your money well. Budgets let you see all your income and expenses in one place, giving you an overview of your money.
If you’re spending more money than you make each month, a budget will catch it. If you’re spending too much money on silly things, your budget will catch it.
As annoying as creating and maintaining a budget might seem, it’s the money accountability partner you never knew you needed. Rather than viewing your budget as an unpleasant drill sergeant, view it as a friendly bank teller who gives you the money you actually have — helping you spend wisely and not get deeper in debt.
3. Automate Your Money
One of the best ways to ensure you’re saving money, is simply to automate your savings.
Just like you automate bill payments, you can automate your savings, too. As soon as your paycheck hits your bank account, you can set it up so your bank will auto transfer a designated sum of money to your savings account.
If you have a hard time saving (because you’re tempted to spend it instead #guilty), automating your savings can do you a whole lot of good!
4. Maintain Your Budget
You’re informed about your income and expenses, you’ve created a budget, automated your savings, and now you’ll do well to do weekly or monthly budget check-ins.
Budget check-ins are important because whether you change jobs, get a promotion or raise, or you are simply having a hard time getting a hold on your spending, the numbers don’t always stay the same. By checking-in you can get your mind back on track, and see your progress.
Even if you are making good progress and have conquered bad spending habits, checking your budget can help you catch any subscriptions you no longer need, erroneous payments, or even fraud.
In order to become a good saver, you’ve got to always take time to show your budget some love.
Strategies to Maximize Your Savings
There are several strategies you can implement to maximize your savings potential. Here are just a few that can really make a huge impact in your money saving journey.
5. Get an Accountability Parnter
As much as a budget is a great form of accountability, having a real live person keep you in check adds to its effectiveness. So, whether you choose your spouse or a good friend, pick someone (who’s able and willing) to keep you accountable on a weekly or monthly basis.
Accountability partners help you keep your money in check, and therefore help your savings grow!
6. Use Cash Only
Take a flash to the past when hard cold cash was king and leave your debit/credit cards at home.
It’s been proven that those who use cash for everything but their bills, tend to spend less. So, keep your bills and savings automated, but take out cash for the part of your budget designated to groceries, gas, spending money, etc.
When you go cash-only, it’s helpful to use the envelope system to organize and keep track of your money.
7. Try the “No Spend Challenge”
The no spend challenge is where you choose a designated day each week (or you can choose to do a whole week, or even a no spend month) where you only spend money on essentials.
This can help make you aware of your spending temptations, and it can teach you better money discipline.
8. Try the “Savings Bucket Strategy”
The savings bucket strategy is where you create different savings accounts that your savings is divided into. So, one savings account might be for purchasing a new car, another may be for those plane tickets to your cousin’s wedding, or for Christmas.
It’s important to name each of your “buckets” to ensure you don’t dip into any of them for things they’re not intended for.
I personally utilize this strategy and it works great. Rather than actually opening up several savings accounts, my husband and I deposit our savings into one account. We then utilize a spreadsheet to keep track of how much money within our savings account is designated toward each bucket.
Find a way that works for you and do it. It’ll bring some motivation to your saving journey!
9. Save Your Loose Change
If you’ve opted into the cash-only system, then you’ll be dealing with lots of change. Rather than tossing it into your car’s center console, or letting it sit at the bottom of your purse, save it.
You’ll be surprised with how much money that loose change can amount to in a year’s time.
My husband and I purchased a coin bank that calculates how much loose change we’ve saved, and after a year we had saved over $200! That ended up covering the costs for a pretty nice weekend away for us.
Improve Your Credit Score
While your credit score may seem totally unrelated to saving money, it can actually affect your savings ability.
If you ever hope to buy a home, or you need assistance with purchasing a new car, having a bad credit score/history will hurt your ability to save. Bad credit scores mean higher interest rates, which means more money unnecessarily tied up that can’t be saved.
So, take the steps today to improve your credit score and begin saving thousands of dollars throughout the years.
10. Check Your Score
First things first, you’ve got to check your credit score in order to (1) know what it is and (2) know what you’re dealing with. You can’t know how to get where you’re going if you don’t know where you’re coming from.
11. Resolve Any Adverse Accounts
On your credit report there should be a section for “adverse accounts.” Even the most money-conscious people can find that they have an adverse account or two, so don’t assume nothing’s there — check!
If you do have any listed adverse accounts, resolve them as soon as you can. These accounts continually do harm to your credit score, and until they’re resolved, they’ll continue to harm your score.
12. Improve Your Credit Utilization
Did you know that 30% of your credit score is based on your credit utilization?
Credit utilization is the term used to describe how close you are to your credit limits. So, if you have a credit card with $10,000 in available credit and you’ve used $9,567, that is poor credit utilization.
If you begin to pay down your balances on your cards, you can improve your credit score quite quickly.
For instance, when my husband and I were working toward paying off our credit cards we consolidated our credit debt onto one card. The card had about $8,000 of credit available, and we essentially transferred that full balance from other cards. Within days my credit score dropped nearly 100 points (the card was in my name), and it was devastating to say the least.
Luckily, we had a great budget that we stuck to hardcore, and as we paid down the balance, my credit score began to work its way back up!
13. Always Make Payments on Time
It can be tempting to skip out on a monthly bill when you’re short on cash. The problem with that is it hurts your credit and creates bad credit history.
A whopping 35% of your credit score is based on your credit history. So, every time you’re late on a bill, your credit history suffers, which means your credit score suffers.
If you’re ever wanting to utilize loans to purchase a home or car, you’ll need to fix your late payment habits. Lenders don’t have much to go on besides your income, your employment history, your credit score and your credit history. If your credit score and history aren’t good, it’ll quickly raise red flags to lenders which can delay your ability to make those purchases.
Also, when you make late payments you may be subject to late payment fees. To avoid spending money on unnecessary fees pay your payments on time, every time, and save money.
The best ways to save money are sometimes overlooked. Sometimes it’s the simplest things that make the biggest impact.
While saving money can be hard to do starting out, once you get the right habits in place, saving money can become easy. Implementing the tips and strategies above can help you save money fast, and even save you thousands in unnecessary expenses every year!
The benefits of saving money are endless. So, go on! You can totally do this! Begin taking steps to start your money saving journey today!