If you’re serious about saving money, establishing a budget is essential. It will help you pinpoint expenses you can cut and make progress toward your savings goals.
For big purchases, try giving yourself 30 days to think about it. This will stop the impulsive part of your brain from taking over.
1. Set a budget
If you have a clear plan of how to save money, it’s easier to stick with it. Whether you want to buy a house, get out of debt or build an emergency fund, a budget can help.
Start by listing your fixed expenses, like rent or mortgage, utility bills and car payment. Next, identify your variable expenses, which could include groceries, clothes and entertainment. Estimate how much you spend each month on these, using past credit card or bank statements.
Consider setting up savings as a fixed expense in your budget. That way, you’ll automatically save a certain amount each month without having to think about it. This method also helps you build a habit and makes saving easy. Plus, it can help you keep track of spending and avoid overdraft fees.
2. Buy used items
It’s an old adage, but it’s true: you can often get much better deals on items by buying them used. Whether it’s clothing, furniture or toys, thrift stores, consignment shops and online marketplaces can all help you score high-quality items for less.
It also reduces waste and keeps functional goods out of the landfill. Plus, many items don’t lose their usefulness after a short period of time.
Cars are a great example. Most people know that a new vehicle immediately depreciates in value the moment they drive it off the lot. Similarly, it’s possible to save thousands by purchasing a used vehicle or even a gently used one. Just be careful when buying used cars and other items from private sellers on marketplaces like Facebook Marketplace or Poshmark.
3. Go one day a week without buying anything
One day without spending money may sound impossible, but it’s an easy way to save. You could put that money into a savings account or use it to pay down debt.
If you need to buy something, try to find a cheaper option. For example, buying generic items can save you 75% or less than the name brand. Likewise, shopping the world food aisle can save you money.
You should also avoid going out to eat at restaurants and cook meals at home. This can help you save a lot of money over time. In addition, you can get rid of your cable by replacing it with online streaming. You can also save by unsubscribing from marketing emails that tempt you to spend. By doing this, you’ll make it more difficult to be tempted by ads on your favorite social media.
4. Refinance your debt
While putting money into savings is an excellent goal, first you need to pay off debt. Credit cards, car loans and mortgages are some of the biggest money suckers that steal your income each month.
Refinancing your debt can help you save by reducing monthly payments or improving loan terms. If your credit has improved or the market provides better interest rates than when you secured your original loan, refinancing can save you hundreds or even thousands of dollars over the life of your loan.
However, be careful when choosing to refinance. New loans can come with prepayment penalties and lower your credit score. This could cancel out the value of saving on interest rates. It is also important to evaluate whether the savings from refinancing will outweigh the potential negative impact on your finances and your future financial goals.
5. Carpool
Carpooling, which is a form of ridesharing that involves two or more people sharing a ride to the same destination, can save you money on fuel costs and reduce your carbon footprint. You can join a existing carpool or start your own, and it’s important to make sure you are carpooling with reliable, responsible people you trust and with drivers who have a valid license and insurance policy.
Carpooling also reduces wear and tear on your vehicle, which can help you save on maintenance costs, as well as reducing congestion and traffic. In addition, it’s good for the environment, as taking cars off the road reduces air pollution at a local level. Some car insurance companies even offer discounts for those who carpool.
