Spending is the easy part of money management. Who doesn’t love the feeling of instant gratification?
But saving money? Sigh.
Just the thought of saving money can incite a myriad of thoughts.
“I don’t make enough money to save!”
“I’m bad at saving money.”
“Saving money sucks.”
While saving money may be tough, it’s an important part of having a strong financial foundation. According to a recent Bankrate survey, 24 percent of Americans owe more on their credit cards than they have in emergency savings.
Life is full of unexpected surprises and having money saved up can help you deal with these occurrences and stay calm, cool, and collected. Without any money saved up? A small thing is suddenly a crisis.
But it’s not just those unpleasant expenses that you should save up for. You can also save up for the fun stuff, like that once-in-a-lifetime dream trip you’ve been thinking about or those new set of wheels you’ve been eyeing.
If you are struggling to save, here are four easy ways to save money.
1. Automate (As Much As Possible)
When you leave saving to your own devices, it can be hard to create a savings habit. After you pay all your bills, make payments on your student loans, etc., it may feel like you have nothing left over.
But the key is to pay yourself first. This remarkably simple concept has a very powerful impact on your finances.
Commit to paying yourself first and use the power of automation to save. By setting up automatic transfers from your checking to your savings account, you’re getting rid of the mental labor it takes to actually commit to saving. While it may seem scary at first, you’ll hardly even notice it.
Here’s what to do:
- Decide what percentage of your income you’d like to save. Many personal finance experts advocate for saving at least 10 percent of your income. If 10 percent feels like a daunting amount, start with 1 percent. So, if you make $2,500 per month, you’ll save $25 each month. Save what you can, but commit to it.
- Pick a date when you want the funds transferred. One easy option is the day after your payday.
- Choose a frequency. You can choose to save money monthly, bi-weekly, or weekly.
- Schedule the automatic transfers!
After employing these tactics, you can essentially “set it and forget it.”
I do recommend reevaluating your savings amount and goals with any big life changes such as a pay increase, move, or job loss. The amount you save doesn’t have to be set in stone and can be flexible and adaptable to your life.
2. Try Using Digit
If you’re looking for another way to automate your savings, consider using a service like Digit. Digit is a free service that helps you save money automatically.
How does it work? According to their website, every few days Digit reviews your checking account to look at spending patterns and transfers a few dollars to your Digit savings account.
Instead of coming up with a number on your own to save, Digit automatically figures out how much you can afford to save, depending on your account balance and spending habits. The amount Digit transfers is small — usually between $5-$50 every few days.
The good news is that Digit has a no-overdraft guarantee, so you won’t need to worry about overdraft fees.
The bad news? You don’t accrue any interest on your savings.
Digit has no fees, no minimums, and allows unlimited transfers — which you request via text message. This service is geared towards people who struggle with saving and really want to have a hands-off approach.
3. Create a Values-Based Budget
Do you dread the B-word? The word budget can feel restrictive — like a diet that doesn’t work. You feel guilty if you go over budget and it feels like a constant numbers game. One of the ways to come to terms with your budget and effortlessly save is to create a values-based budget.
One of the ways to come to terms with your budget and effortlessly save is to create a values-based budget.
A values based budget aligns your spending and savings goals with your values. If you’ve ever regretted a purchase or felt like you wasted money unnecessarily, you’ve probably experienced spending money on things that aren’t aligned with your values.
By creating a values-based budget, you consciously commit to cutting out things that don’t make you happy, don’t make your life easier, and don’t help you in some way. In their place, you focus relentlessly on the things you value.
For example, I value travel over a lot of things. Because of my love for travel, I have eliminated expenses that don’t serve me the same way.
I don’t have a car, a gym membership, or cable. Just doing some rough math, avoiding just these expenses probably saves me at least $3,000 per year.
While it may seem like I’m depriving myself of the good things in life, it’s really just me spending on my values. By doing so, I can focus on my student loan repayment and enjoy a nice jaunt abroad now and then.
Here’s what you can do:
- Make a list of the things that you value in your life, in order of importance.
- Look at your current budget and spending habits. Are there areas you could cut back on to fuel your true goals and passions?
- Save for your future goals, based on your current values. This can make the saving process inspiring and fun instead of boring and chore-like.
A values based budget makes it easier to save and spend on the things that really matter.
4. Create Savings Buckets
All the tips I’ve listed above have made saving a whole lot easier for me. But this next technique totally revolutionized the way I save.
When I first started automating my savings, I kept one large chunk of money in a savings account. I would transfer money haphazardly when there was an unexpected expense or something that I wanted to buy. I felt very unclear about my savings goals and what the money was actually for.
That is until I discovered Capital One 360. They allow you to have up to 25 savings accounts for all of your financial goals — think of these like savings buckets. My favorite part is that you can nickname your accounts, so you know exactly what the money is for.
I have a savings account for my emergency fund, taxes, travel, health expenses, moving fund, etc. I automate a certain amount to these savings buckets each month, in order to reach all my savings goals.
This is all very easy with Capital One 360 as they have a Goals feature that allows you to set up target balances and a time frame to reach your goals. I love it because it’s a simple way for me to save for all my goals and quickly see the progress — without all the confusion of having one lump sum.
Saving money doesn’t have to be hard or feel like a chore. If you feel like you are struggling to save, use these tips so you can start saving effortlessly and spend your time on the things that matter to you.
What are your favorite easy ways to save money?
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