We all hear that saving money is good for us but how are we supposed to do it?
Here are some hints for you to save money.
Record your expenses
The first step to saving money is to figure out how much you spend. Keep track of all your expenses—that means every coffee, newspaper, and snack you buy. Ideally, you can account for every penny. Once you have your data, organize the numbers by categories, such as gas, groceries, and mortgage, and total each amount. Consider using your credit card or bank statements to help you with this. If you bank online, you may be able to filter your statements to easily break down your spending.
Make a budget
Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending. In addition to your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance. Find more information about creating a budget.
Plan to save money
Now that you’ve made a budget, create a savings category within it. Try to put away 10–15 percent of your income as savings. If your expenses are so high that you can’t save that much, it might be time to cut back. To do so, identify non-essentials that you can spend less on, such as entertainment and dining out. We’ve put together ideas for saving money every day as well as cutting back on your fixed monthly expenses.
Choose something to save for
One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—anything from a down payment for a house to a vacation—then figure out how long it might take you to save for it. If you need help figuring out a time frame, try Bank of America’s savings goal calculator.
Here are some examples of short- and long-term goals:
Short-term (1–3 years)
Emergency fund (3–9 months of living expenses, just in case)
Down payment for a car
Long-term (4+ years)
Your child’s education
Down payment on a home or a remodeling project
Of course there can be other strategies to use for having a good saving but for now, you can hold on to the three mentioned above.