Understanding how to save money, whether for retirement or a snazzy new pair of shoes, is an important ability to develop. Just as dieters find more success when they change their lifestyles rather than try out a fad diet, so do many would-be spendthrifts find saving easier when they alter their lifestyles to match saving goals. There are many tricks and tips to help start saving money, but it remains the job of the individual to create a daily routine in which saving is a primary goal.
One of the most important things a person can do to start saving money is analyze their current habits. While going out to $300 US dollar (USD) dinners once a week might be an easy place to see wasted funds, the smaller spending leaks of $4 USD lattes, lunch out every day, and indulgent cell phone service packages are much more likely to be doing damage to a savings plan. Using a notebook or budgetary software, track purchases for three months, being sure to break each expenditure into a specific category, such as “groceries,” “take out,” or “clothing.” Doing this type of tracking for a few months will quickly reveal where money is leaking out on extras when it could be going toward a savings goal.
Some people find that using cash can help with saving money. Though automatic debit and credit cards are easy to use, they also make it easy to overspend. If a person has a budget for each necessity, such as food, gas, and entertainment, they may find spending goals easier to match by withdrawing the total amount at the beginning of the month, and using the cash exclusively for purchases in each category. One bonus of the cash method is that any unused cash at the end of the month can be used for a splurge or be diverted back to the savings account.
Another important trick to saving money is to prevent temptation by opening an automatic debit savings account. This way, each time a paycheck is deposited, a set portion goes directly into a savings account, retirement account, or other savings mechanism. Removing the money before it has a chance to be spent can help keep savings safe.
Reduce, reuse, and recycle is not only a means of helping the environment, it can also help with saving money. Try to reduce excess spending by buying reusable water bottles and filling them at home, or by re-purposing empty jam jars as vases and drinking glasses. For the amount it costs to buy coffee out, a person can easily French press their own beans, tote them to work in insulated mugs, and even have extra to share with friends. Incorporating a reuse and recycle method into spending habits may help benefit both the earth and the retirement account.
Make sure that money in the bank is working its hardest to generate interest. Instead of using a regular savings account, consider investing savings or opening a retirement account that generates much higher interest over time. While retirement account investing usually requires that the money be left alone for a certain period of time, the increased returns can be considerable in the long run. Putting money into savings accounts with higher interest rates can turn a nest egg into a flock of savings benefits.