Whether you’re a millionaire or next to broke, saving money is one of the hardest things to do. And it’s easy to see why. With so many financial obligations in addition to our wants, it’s a miracle anyone saves at all! But it is possible, even in the tightest of times. Here’s how you can get started.
1. If you haven’t already, make a budget. Determine what you can realistically afford in terms of housing, utilities, transportation, food, and all the basics. Next, determine how much of your income you can dedicate to ‘fun’ money, like going to the movies, shopping, and eating out.
2. Take the amount left over (and if there isn’t any, you should see where you can cut from the above items) and put it into a savings account.
3. It’s up to you how much you want to save. One common method is the 50-30-20 rule, where 50 percent of your paycheck goes to required expenses (house, food, utilities, etc.), 30 percent goes towards wants, and 20 percent goes into savings. Again, it’s personal and up to you.
4. When payday comes, take your allocated amount and immediately transfer it into your savings account. Pay yourself first before buying more wants. That way, your money is put into a safe place before you can spend it on impulse buys you may end up regretting.
5. Some employers allow you to split your paycheck between a checking and savings account. The idea is that once the money is in savings, it’s already gone from your mind and you won’t touch it. If you’re disciplined, you can apply a similar concept on your own if you don’t get the automatic transfers.
- Watch those hidden fees with savings accounts. Every bank is different. For instance, one bank might let you transfer money out of your savings into your checking account only three times per month before they charge you. Others might require you to maintain a minimum savings balance. Be sure to read the fine print if you don’t want to see your savings squandered on mindless bank fees.