No one wants to be short on cash.
If you’re not making much money, though, it often seems like you have no other options.
If you do want to save, however, there are some steps that you can take to put away money regardless of your income level.
Following these tips will change the way that you view your money.
1. Make a Budget
The most effective way to save money is by knowing where your money goes every month.
A budget is the foundation of every good savings plan regardless of whether you are super wealthy or living paycheck to paycheck, so make sure that you have one in place before you do anything else.
When you have a budget, your finances stop being quite so nebulous and start looking much more concrete.
A budget is a tacit admission that you only have a limited amount of money coming in and that the money goes somewhere every month.
Once your start writing things down, you can make sense of why your finances are so tight and where you can make changes.
Getting a good idea of what your monthly bills look like, what your real income looks like, and what you spend the most money on every month can be shocking but it’s also very important if you want to find a way to save money.
2. Cut Down Unnecessary Spending
Now that you have a budget, it’s time to start cutting things out.
Look at your highest-spending categories from your budget and figure out where to make cuts.
Most people can’t really make changes in where they live or how much they make in the short-term, but they can start cutting out costs related to entertainment or food in order to make a dent in their monthly expenses.
The first goal is always identification, though, so that you can prioritize where you are going to make your cuts and decide what is vital to keep in place.
This is not to say that you should never spend money.
What it means, though, is that you need to figure out where you can realistically make cuts.
Sometimes that means cutting down the number of times you go out with friends every month and other times that means starting to pack your lunch instead of going out to eat when you are at work.
Even something as simple as making coffee at home instead of buying it at a coffee shop can make enough of a difference in your budget that you can get a little bit of extra wiggle room.
3. Pay Yourself First
Now that you’ve cut down your spending, you have to start saving.
The most effective way to do this is to treat your savings like a bill and to pay it first every month.
This is obviously something that can’t be done until you’re in a place where you actually have enough money to save, but even taking what you would’ve spent on entertainment for a month and putting in a savings account can allow you a chance to start developing better savings habits.
This always begs the question of how much you should put into your savings account every month.
While there are those who will quote you specific dollar amounts or percentages, the truth is that this is always going to be determined by how much you can afford.
The goal is to increase this amount over time, so don’t feel embarrassed if you can only move a few dollars over to savings every month.
Simply knowing that you’re able to do this at all means that you’re starting to win your battle against your own budget.
As a note, the money that you’re putting away for savings needs to be thought of as an emergency fund.
It only needs to be touched if you have a legitimate emergency – all other avenues should be explored first.
You should be able to let this fund grow so that you can turn it to more useful pursuits in the future.
4. Leverage Extra Money
The fastest way to grow your savings account is always going to be by throwing extra money into the account.
If you’re already struggling to pay your bills, though, this might not seem like a realistic possibility.
One of the better ways to save your money is by throwing any extra ‘found’ money into your accounts in order to provide it with a quick infusion of cash.
What is ‘found money’? Simply put, it’s any money that you didn’t plan on getting in your budget.
This can include birthday money, money that you get back from a tax return, or even money that you made working unexpected overtime.
The money that you need to live should already be accounted for in your budget, so you won’t be hurt by putting this money away.
This is also a good way to stop looking at this as ‘extra’ money; instead, this kind of money becomes something that you can leverage in the future.
5. Pay Off Your Debt
One of your biggest goals should also be to pay off your debt.
Debt isn’t just something you pay every month – it’s something that is going to keep your budgets tight and your dreams out of reach for years to come.
While putting money in your savings account is a good idea, you’ll eventually reach a point at which you have a good safety net.
Once you get there, it’s time to start looking at how your can get rid of your debts.
There are several recommended ways to look at paying off your debt, but the best is always to deal with those debts that have the highest interest rates first.
Though some say to go after those with the lowest balances, the truth is that high-interest debt is what ends up costing you more money over time.
Making an extra payment to a high-interest credit card every month can be pricey, but it keeps you from having to pay high fees and it will eventually allow you to pay off the card before it can do more damage to your finances.
6. Create Usable Goals
Finally, make sure that you have a good reason to do all of this work.
While it’s very easy to sustain the idea of saving money early on, you’re eventually going to hit a point where the sacrifices just don’t feel worthwhile.
The nights you spend at home alone when you could’ve gone out are going to feel bad and you’ll soon wonder if it wouldn’t make more sense just to break your budget a bit.
The best way past this is to know why you are saving your money.
Give yourself a reward for reaching milestones and some short-term goals that you can actually accomplish.
Hitting four digits in your savings account might be celebrated by a nice meal, for example, or paying off a credit card might give you enough room in your budget for a night out.
Make plans, celebrate your success, and make getting your finances in order a part of your life.