If you’re not saving money, you’re one emergency away from financial disaster. Your first step is to figure out why it’s so hard for you to save.
1. Acknowledge the Problem
Maybe you’re overspending, or perhaps you need a side hustle because your paycheck barely covers your bills. Once you figure out the “why,” you can change your habits to start saving money.
2. Stop Worrying About Your Self-Image
When you obsess about looking successful, you risk living a lifestyle you can’t afford. No amount of material goods will make you happy. Focus on yourself and your goals, and find ways to fill emotional voids that don’t require spending. Learn to say “no.” Repeat it whenever someone pressures you to overspend or distracts you from your goals.
3. Track Your Spending
If you want to have cash left over from your paycheck, you need to track everything you spend. There are tons of tools that you can use to track your spending, including budgeting apps, Google Sheets and Excel. Or you could take the old-school approach to budgeting by documenting each transaction in a paper notebook.
4. Focus on Your Biggest Expenses First
If you’re living in a home you can’t afford or drive a car that’s beyond your budget, you’ll probably never stop living paycheck to paycheck, no matter how much you cut the smaller stuff. Try to avoid spending more than 20-25% of your gross income on rent or your mortgage, even if that means you need to downsize by finding a smaller place, get a roommate or move in with family. Your car payment shouldn’t eat up more than 10% of your gross budget, so consider a cheaper ride or alternative transportation if you’re paying too much.
5. Re-evaluate Your Debt
By refinancing your home or consolidating your credit card debt, you could save big bucks on interest. Adams’ Online Loan Comparison Chart can help you compare your lending options.
6. Set Up Automated Savings
Automation is your friend when it comes to saving money. You’ll be less tempted to spend money when you save it before you have the chance to touch it. If you contribute to a workplace retirement account like a 401(k), you’ve already automated savings because contributions can only be taken out of your paycheck. Consider setting up automated transfers to an individual retirement account (IRA), 529 savings plan for your child’s education or a savings account.
7. Find Ways to Earn More Money
Sometimes cutting expenses isn’t enough. If you need to make more money, consider getting a second job, working extra hours at your primary job or taking on a side hustle. There are tons of ways to earn extra money, such as driving for Uber or Lyft, grocery delivery, taking online surveys, and more. Or, perhaps it’s time to make the case to your employer that you deserve a raise or promotion.