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How to Start Saving When You’ve Saved Nothing

Posted by Adam Rossi on Mar 27, 2019 10:00:00 AM

How to start saving when you have saved nothing

Conventional wisdom is that you should start saving as soon as you can. While the sentiment of establishing savings early on is a good one, the reality is that it’s not always easy: whether it be your financial expenses or confusion about how you can start really saving some money, building a healthy amount of savings can feel like something in a far-off future instead of something you can start doing in the present. That doesn’t have to be the case. Even if you feel like you can’t save, you might be surprised to find that you have more to contribute to a savings account than you would believe. While it might require some penny-pinching and lifestyle changes, starting somewhere is better than not starting at all.

Where Do I Start?

First things first--we’ll want to start by talking about actually starting a savings account, and figuring out the type of account that makes the most sense to you.

If you’re in the position of having saved no money thus far (or you’ve been hiding money under your mattress), opening a sort of, “starters” savings account can be as easy as filling out an online application with a local bank or credit union. These accounts allow for any amount of money to be deposited to start--literally as low as one cent--and can begin to accrue an annual percentage rate (APR) once your savings balance gets a little larger and as you deposit more over time. There is typically a small fee associated with opening these accounts, but nothing that will break the bank (pun intended).

So How Can I Start Saving?

Opening an account is all well and good, but what’s the point if you don’t think you’ll be able to deposit much of anything? Even if you don’t have a ton of flexibility when it comes to your finances, there are a few pointers that will help you start saving some money:

  1. The 50/30/20 Rule: One general financial strategy that can be effective when it comes to starting to establish savings is the 50/30/20 rule, which goes something like this: 50% of your monthly income goes to needs like rent, groceries and bills; 30% goes to the things you want like hobbies, desired purchases, and going out (whether it be to dinner, the bar, and so-on); 20% goes into your savings account. This is not a steadfast rule; If you can only afford to put 5% or 10% of your monthly income into savings, that’s absolutely better than nothing at all. You have to start somewhere.

  2. Find Savings Funds in the Small Things: You might be thinking to yourself, “My monthly expenses are so tight, where would I even find the money to save?” One way is to start thinking about how you spend your money on a month-to-month basis, and what you might be able to cut down on and start diverting into savings. If you go out to dinner or hit the bars every weekend, consider aiming to cut that in half (making dinner at home or inviting friends over to your place instead of spending money at a restaurant or local pub) can save you a good chunk of change over time.

    Try to avoid impulse buying! Make lists before you go grocery or clothing shopping, and try to stick to that list. One handy rule that can help with impulse buying is the, “ten second rule”. If you find yourself about to buy something that isn’t on your list, take ten seconds to think about why you’re buying the item, and if you really need it.

    A few other small things that you can do to save some cash include:

  • Utilizing thrift stores; it’s a lot cheaper to buy used!

  • Make big meals, and save the leftovers for your work lunch and dinner throughout the week

  • Buy generic brands at the grocery store instead of pricier name brands

  • Buy necessities in bulk (the initial cost is more but in the long-term, you’ll save)

  • Only pay for streaming subscriptions that you use; See if a friend or family member has an account and is willing to share or split it with you--that way you’ll both save!

  • Don’t hoard! If you have things that you never use, consider having a yard sale

  • Try to drink tap water instead of buying soft drinks or bottled water. Those two dollar purchases add up!

  1. Do Your Research: This is especially important when it comes to bigger, pricier buys. While that ridiculously cheap toaster might seem appealing because it’s so affordable, often times cheap products won’t end up lasting you nearly as long as a more quality product would--which will end up costing you more money in the long run. That doesn’t mean you have to buy top-of-the-line everything, but before you make a big purchase, do a little digging into consumer reviews to see if the product you think you’re buying is actually what you’re getting.

    It’s better to spend a little more initially for something that will last you a long time than to make a smaller investment and ultimately end up needing to make that purchase again in the short-term. Also consider giving yourself 30 days to really think about making any big purchases (both to give yourself some time to consider if it is a necessity and to do a bit of research).

  2. Budget, Budget, Budget

    Before you start putting money into your savings, make a budget of your expenses vs. income for every pay period. Once you have a good understanding of what you’re really spending, you’ll start to understand where you could stand to cut back a bit, and how much you can realistically start saving. Making a budget can be a little intimidating at first, but it will go a long way in helping you improve your financial health in the long-term.

Life isn’t always predictable, and sometimes financial emergencies can pop up without warning; That’s what makes saving so important. It’s always good to have a backup plan in place for the unexpected. Plus, if you can start putting away a little something for the future you - that doesn’t hurt either. No matter your financial situation, it’s never too early (or too late) to start saving!

Topics: Saving Money