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 to put away money.
Building a healthy amount of savings can be hard to start. 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.
It can be hard to get out of the habit of overspending, but there are many small ways to stop spending and start saving money today.
Here are some tips to teach you how to start saving money.
Where Do I Start?
First things first – we’ll want to start a savings plan by figuring out which type of savings account you want.
If you’re in the position of having saved no money yet (or you’ve been hiding money under your mattress), opening a “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 – as low as one cent – and can begin to accrue an annual percentage rate (APR) once your savings balance gets larger.
There is typically a small fee associated with opening these accounts, but nothing that will break the bank (pun intended).
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.
The 50/30/20 Rule
One general savings plan that can be effective when it comes to beginning to save is the 50/30/20 rule.
This means that:
- 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. If you can only afford to put 5 or 10% of your monthly income into savings, that’s better than nothing at all. Everyone starts somewhere.
Small Expenses Add Up
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 look at 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.
Make dinner at home or invite friends over to your place instead of spending money at a restaurant or local pub.
Over time, these little changes can save you a good chunk of change.
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.
Reduce, Reuse, Recycle
Go to GoodWill, Salvation Army, or other local thrift store. It’s a lot cheaper to buy used, and you’re helping to save the planet.
At the grocery store, buy generic brands instead of the pricier name brands. There typically isn’t much of a difference, and you will save.
Instead of buying ingredients for multiple meals, make a few big meals and save the leftovers for your lunch and dinner throughout the week.
For household necessities like toilet paper, cleaning supplies, and garbage bags, buy in bulk. The upfront cost is higher, but you’ll save in the long run.
Even a low price of $10.00 per month for streaming services can add up, especially if you aren’t using it much. Ask around for a family member or friend who has an account – that way you will both save.
During spring cleaning, sell the items you don’t use. You can utilize Facebook Marketplace, or have a yard sale. Try to drink tap water instead of buying soft drinks or bottled water. Those two dollar purchases add up.
Do Your Research
Doing your research is especially important when it comes to bigger, pricier buys.
While that 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.
You’ll end up paying more money to replace the item than you would have if you had paid more upfront.
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.
It’s better to spend more initially on something that will last you a long time instead of having to purchase an item multiple times.
Consider giving yourself 30 days to really think about making any big purchases. This will give yourself time to research and make sure it’s not an impulse buy.
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 can cut back and how much you can realistically start saving.
Making a budget can be 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 a future you – that doesn’t hurt either.
No matter your financial situation, it’s never too early (or too late) to start saving.
Get in Touch With our Savings Experts
For assistance in starting a savings plan, contact our team of experts today. We can help guide you to the perfect savings accounts for your lifestyle.
