How to save money is on the minds of just about all of us. At the same time, according to all the statistics more and more Americans are living paycheck-to-paycheck or on a very thin budget.
The good news is that our credit scores are improving. Some of this is due to the changes in credit score algorithms.
But the question remains, how to save money when you’re sitting on such thin financial ice. If you have loans, such as student loans or credit card debt, saving money each month can appear like an impossible task. Even though you know it’s important, there seem to be no easy strategies for how to save money.
A recent article in MarketWatch Report cites a CFSI health survey that found that only 28% of Americans are financially healthy. Debt and sporadic savings habits are cited as two reasons for poor financial health. The survey also found that 44% of respondents spend more than they earn and rely on credit cards to cover the gap. 42% of respondents said they have no retirement savings.
Living on the edge like this causes financial stress. Financial stress leads to poor mental and physical health. Eliminate the financial stress and you stay healthy. Another way to save money.
Easy enough to say, but in reality, how to save money when the odds seem stacked against you?
Here are 5 hacks to help you save money.
1. Pay Yourself First
Commit to a set amount or percentage, even a small amount, and deduct this from your paycheck. Put this amount immediately into your savings account. You do this first before you pay your bills.
This hack gets you over the issue of not having any money left over once you pay the bills. If you find yourself a little short of money to pay all the bills, paying yourself first is a strategy that will help you eliminate wasteful spending. It means you need to prioritize your expenditures.
This hack takes some discipline, but if you set up automatic deductions from your account, you will remove the temptation to spend the money. You will be surprised at how accustomed you become to living on less money each month.
2. Put Extra Money Right Away into Savings
Another easy way to learn how to save money is to take any extra money that comes in and put it right away into your savings account. Let’s say your employer gives you a bonus. Pretend you never got the bonus. Put it into your savings account. You can arrange with your employer to automatically transfer your bonus to your savings account.
3. Don’t Get Caught Up in Technicalities
The logistics of how to save money can seem daunting. In the beginning, everything can be simple. Open one savings account. Ideally, you would have separate accounts for emergencies, retirement, major expenditures, etc. But, for now, begin with one account. Let this one account start to earn money for you. Later, once you are accustomed to a regular savings strategy, you can separate out the accounts. The most important thing is to save.
4. Track Your Spending
No discussion of how to save money would be complete without talking about how important it is to track your spending. So much money passes through our fingers like water. Tracking money is a simple hack to help you save money. Once you know where your money is going, you can implement an expenditure reduction plan.
Money is wasted on more than coffees and unused gym memberships. Money that you could be saving might be going to unnecessary fees. Check out your what kinds of fees your bank is charging. If you’re not getting some free perks from your bank, such as free checking and the best interest rates, then switch. You won’t find great interest rates at any bank, but search for the best. Ultimately, you will want to move your savings into greater earning investment accounts.
5. Improve Your Credit Score
A low credit score costs you money. If you need financing, you will pay more in higher interest rates and fees. Your auto insurance will cost you more. A low credit score may even cost you the job you want, which could give you the salary you need to meet your financial goals. Improving your credit score is a critical thing to do when trying to figure out how to save money.
Bottom line: When thinking about how to save money, begin with the simple.