It’s Easy to Save, Here’s How

All too often I hear from people that they just can’t save. When I dig into the details, I uncover many opportunities for saving. It’s not that people can’t save, they just don’t know how. Not matter how much you make, there are probably many ways you can cut back on expenses and take those savings and put them into a savings account and watch your money grow.

As I have pointed out in other columns, it is important for you to have an emergency fund. This fund should be at a minimum equal to 3-6 months of your monthly living expenses. So if you spend $2,000 each month, your emergency fund should be between $6,000 - $12,000.

My last column "Pay Yourself First", explained how to make savings a priority by setting up regular, recurring payments to a savings account. You need to make saving a priority, just like with your mortgage or rent payment. Also, you need to make it automatic. If you don’t see it you won’t spend it. By deducting a set amount from each paycheck you will be amazed at how quick your savings will add up.

Unlike the government, most families can’t spend more than they make. So first you need to understand where you are spending your money and then identify if there are areas where you could cut back or eliminate spending. By doing so you will be able to save even more.

So how can you find the money you need to fund your emergency fund?

Consider these options:

1. Bring your lunch to work instead of eating out. This could net you $25 per week, which could turn into $1,300 in one year.
2. Dine out 1 less meal per week. For a family of four this could mean a savings of $25 per week, which is $1,300 per year.
3. Make your own coffee instead of buying that cup of Starbucks or eliminate one or two cups a week. This could save you $10 per week or $520 per year.
4. After you pay off your car loan, or other loan, keep making the payment, but deposit it to your savings account. If the payment was for $250, this would increase your savings by $3,000 in one year.
5. Next raise you get at work, save the increase. Determine the change in your net pay and set up an automatic deduction to transfer the additional net pay to your savings. You are already meeting your expenses, more in your checking many just cause you to spend more. If your net pay increased $50 per paycheck that would result in $1,200 in savings. (assumes 2 pay periods per month)
6. Keep your change. Only use bills when making purchases with cash and deposit the loose change in a container. After a few weeks take the container to the bank and deposit the loose change. What you thought was just of bunch of coins can turn into $20 - $30 per month.

While this list is by no means all inclusive, it will hopefully get you thinking about what you can do in your own individual situation.

Get started today and it will be really easy for you to have over $1,000 in savings in less than a year. Savings can be easy, but it requires some sacrifice. The beauty is that the sacrifice has rewards. A little saved now adds up to a lot later.