When it comes to saving money, everyone has, at one time or another, developed a strategy or plan only to have it fall through in the end. Why not make 2017 different? Saving money can be simple if you understand some basic strategies. These simple solutions may be things that you haven’t even thought of, or have thought of, but didn’t implement correctly. So, stop pulling your hair out over bills and money. Below are just some of the simple ways that can help you save money and live a happier life starting in the New Year:
Pay Yourself First
The number one savings strategy is to PAY YOURSELF FIRST. Financial advisors even go so far as calling “pay yourself first” the golden rule of personal finance. So, what does it mean? For the most part, it means taking a chunk of your paycheck out and depositing it into a savings account or retirement plan. This is also referred to as an emergency fund. If something happens, you’ll have extra income to help you through a possible financial crisis.
One reason why this method might not be used, however, is because Americans believe that if they do set money aside, they won’t have enough to pay their bills. One way to avoid this dilemma is to budget and downsize.
You might be thinking, well, of course, I need to budget! The truth is, however, that over 40% of Americans fail to effectively follow through with this strategy. It’s hard to change any habits, especially spending habits, but if you successfully budget, you’ll really start to see a financial difference.
The first step is to list all your monthly expenses (housing, food, transportation, recreational activities, etc.,) and estimate what you spend on each expense every month. In order to effectively examine your spending habits you can use some online tools like https://www.budgetsimple.com/, or map out your budget on a basic spreadsheet (Excel). You also should regularly check your bank account(s) a few times each month, or use cash. Some people don’t like to carry cash around, but it gives you a better idea as to how much money you’ve already spent.
Once you figure out a monthly budget, you can start downsizing. Figure out what monthly expenses aren’t essential and trim down what you money you put towards those expenses. For example, you might consider moving to another (and more affordable) neighborhood. The truth is that over half of the money that Americans earn goes towards housing. If you decide to move to a “less trendy” neighborhood, you could potentially save a few hundred dollars every month.
Another great way to downsize is to find discounts and pay less for things that you usually buy. Remember, bigger isn’t always better. This is especially true if you own your own business. With that being said, you may consider streamlining your business. Streamlining is great for any part of your life or business, including downsizing. It helps put into perspective what resources you could probably do without.
Open More Than One Bank Account
If you do own your own business (or just want to save money in your day-to-day life), it’s a good idea to open up more than one bank account.
Opening only one bank account may work for some people as it can sometimes be a simpler form of financing. However, as you get older you’re likely to start making more money. Opening more than one bank account will help to organize this income. An example is keeping your checking and savings account separate. Going back to “pay yourself first,” if you have a savings account or emergency money set aside, it’s much easier to save money. If all your money is in one account, you’re more likely to miscalculate exactly how much money you can afford to spend. This can lead to some daunting mental math, confusion, and mistakes. But, how do you know which bank to choose?
Choose the Right Bank
Everyone has different needs when it comes to banking. When you want to save money, it’s important to research interest rates; the higher the interest rate, the more money you’ll save. It’s also a good idea to pick a bank that’s backed by the FDIC (Federal Deposit Insurance) so you can insure a percentage of the money in your savings account. That way, if the bank files for bankruptcy, you’re protected. Finally, it’s also important to sign with a bank that allows you to easily access your checking accounts that have no fees attached.
You should also ask yourself, what makes you the most comfortable?, Do you immediately want to find out more about the bank?, etc., If you find that you don’t immediately want to open an account with that bank, then it might not be the right bank for you.
There you have it! These are only 5 ways to save money in 2017. They’re simple but they get the job done. Now, the hard part is implementing these ideas and habits into your everyday life. However, if planned out correctly and with a little discipline, you’ll start to see savings. Don’t worry. With hard work, anything is possible.