Creating a budget and saving your money is easier said than done, but you can do it if you take the proper steps and stay within your limits. If you’re tired of not having money in the bank, there are some things you can do to help create a safety net for your finances. You will learn how important a structure for creating a budget will help you save money, and how personal financial knowledge will propel you to your savings goal. If you’re unsure where to start, reading these tips will help net you more money for the future and allow you to create a nice little nest for your personal finances.
Complete a Budget
The first step to saving money is to create a budget. If you’re unsure about your spending habits, you can go over your finances for the last month or two. Getting a sense of where your money is going will help you in creating a budget. There are different ways of doing so, and either way is fine. Whether you want to go through and see what you should spend, or listing what you did, you will be able to make a budget. It’s a good idea to use both methods so you have a complete picture of what you’re spending your money on, and what you can cut out of your spending habits.
When you have an idea of where your money is going, you can enter the information into an Excel spreadsheet. It allows you to view how much you’re making, and how much you’re spending. You’ll have total control over your budget if you decide to use a spreadsheet, plus you can see if you have any money left over. You should consider irregular events, such as car repairs or birthday gifts. These factors can take up a large part of your budget, but as long as you make a purpose for each dollar, you’ll be able to save up where you need to. Overestimating how much irregular events will cost can help you save money for the long run and give you some breathing room.
How Much Can You Save?
Before the housing market crashed in 2007, studies showed that Americans spent more than they earned. For every dollar made, there were zero dollars going into a savings account. Times have changed; the market is starting to pick back up, and more people have decided to start putting aside their money. If you’re unsure where to start, you can start setting aside 10 percent of your income in a savings account. It’s not much, but over time, it will add up.
Let’s say you’re single and making a decent salary– somewhere in the $50,000 range. You could start putting away 20-30 percent of your check into a savings account. It’s a good idea to get started now, since the money you’re putting away now will grow bigger down the road. If you can imagine where you’re going to be 10 years from now, you’ll have a better idea of the costs of having kids. Get an idea of how much you could comfortably save, and then save even more money. You’ll be happy you have started now, instead of waiting to settle down.
Spread Your Money
Whether you receive a direct deposit or get a printed copy of your check, it most likely goes straight into your checking account. There are things you can do to help you spread your money so you won’t have to worry about it. You can ask your company to send a certain amount of your check into a separate account. If you go through a place like ING, they’ll automatically take some of your paycheck and put it into an investment account. Using an automatic deduction is an excellent way to save money, and you can do less work while making more money.
Investing is crucial to saving money. Apps such as Acorns and Stash are very helpful, and you don’t need a lot of money to put down. Acorns is great because they use a rounding system so any purchase you make, the extra change rounds up and gets invested. It’s a great way to start investing without having a lot of upfront capital. Investing is a great long term solution for saving money, and using your savings account for short or mid-term things will benefit you even more.
It’s always a good idea to start saving your money as soon as possible. The more you do today, the brighter your future will be. Whether you’re planning a trip around the world or just looking to buy a new car, setting that money aside today will yield greater benefits in the future.