(This post comes at the beginning of the New Year which is when people are making resolutions, but that was not my intent. Just a happy coincidence there, so... Happy New Year! Hope your 2015 is going well so far.)
I was thinking about the processes of saving money and how people struggle with doing so, so I wanted to share some tips/ideas on how to get started. Granted, now that I have an understanding of more financial things than I did, I still believe that "Big Wins" (investing well, automating, etc.) are a great way to do things. But on the same level, I understand that sometimes, working on something like that can feel like a stretch at best and impossible at worst, if you can't even get some basic money in the bank-believe me, I get it.
So if you need a few Small Victories to help you feel like it is possible to get started, here are some things I find to be helpful to get STARTED in your savings goals, in no particular order. A lot of these I have used personally, and some of them I have seen around that I think could work for people.
Use as many or as few as your tolerance allows (allowing you to still enjoy life, and not spend every waking moment obsessing about the next thing to cut), and soon you'll find that you're starting to build a nice nest egg. I'd even wager that you'll start to see your own creative brand of saving money emerge and come up with other ideas, all your own. Good Luck!
1. Starting very basic: Save $1/day. At the end of a year, you'll have saved $365. (Or, more accurately, $365 and some random change if you have the savings in an interest-bearing account.) I truly believe that ANYONE can save one dollar a day. Mastering the idea of saving small amounts when you don't have money or are just getting started is extremely important too-because if you are not in the habit of saving and managing finances with nothing, having money won't change that, and can lead to some very bad money habits that are harder to correct when you DO have money. $1/day is a great way to start a good habit in a sustainable way.
2. Conversely, there is the Savings Money Jar idea that people have been using. In this, you save progressive amounts each week, starting with $1 the first week, then $2 the second week, etc., to the point where you save $52 in the last week, so at the end of the 52 weeks, you'll have saved $1378. That's a nice chunk of change to add to the nest egg, and of course, if you're able, you could always ramp it up to save more each week, as well. One thing though: While most/all of the links that talk about this use a Jar, PLEASE put the money in a savings account and not on your counter/in a jar where it's too easy to be tempted to spend it...
3. Round Your Funds. One Thing I have always is to round up and down on funds, down on deposits and up on expenses. For example, if a purchase is $3.50, I will say it's $5 in my tracking. Conversely, if I make a deposit of $100, I will note it as $95. If you use this method, it will create a cushion for your account, in amounts that may be a pleasant surprise for you. After a certain period of time (once a month, once every week, whatever works for you), transfer the cushion amount to savings.
4. Brown bag your lunch. This seems like an obvious choice, but one that many people don't take advantage of. Of course, bringing your own lunch is definitely less expensive than buying it every day. This also has the advantage, from a fitness standpoint, that you can control what is in your meal and the portions. Win, win if you ask me.
5. Do you shop at a grocery store that puts the "You saved XX Today" on the receipt? Transfer that amount to savings when you get home. True, it may only be a few dollars, but every little bit adds up. This also works well with the rounding technique I use above for things. If your budget for groceries is $50/week and you only spend $46, that $4 could be transferred to savings to help add up.
6. When I finally automated finances (in a better way since it had always been auto pay, etc.), I set up Separate bill/spending accounts and 7. Separate savings/spending accounts. So Three Accounts total (in reality, more than that because, as I've mentioned before, I have at least 3 saving accounts for different goals)- one for the bills, one for savings and one for the spending money that I allotted to us. You don't have to get as complicated as that if you choose not to (or, you can get more complicated if you choose to), but I would recommend at least having separate accounts for everyday and for the savings so the savings you're building don't accidentally get spent on regular things. And, if you can keep your savings so that it's harder to access, even better.
8. Automate Savings. Yes, this is a "Big Win", and I was giving ideas on smaller victories you can do, but this is probably the easiest way to save. Use Direct Deposit and set aside part of your pay directly into savings account. The amount is up to you and your situation, but even $10/paycheck ($5/week) adds up. And If you don't have to worry about transferring money each time you're paid because it is direct deposited, you're that much more likely to stick to it.
9. Find ways to spend less on things you already buy. This one is a bit more broad, but leaves a lot of possibilities. For example, with few exceptions, store brand items are just as good as their more expensive name brand counterparts. (But you should double check the per-unit pricings, because some things are grouped as if they are savings, but aren't. 3/$5 on an item for store brand is not as good as $1.50/each for a name brand.) It also helps to buy from the bulk section of grocery stores so you can get just the amount you need. (Bonus: Better for the environment since there's less useless packaging.) There's also the dollar store for many, many things. I've never been one for coupons, really, unless I have one for something I am already buying, but many people use them to great effect. Since this option breeds creativity, I bet you can find other ways to shave off expenses and save.
10. Define why you are saving. This, perhaps, should have been tip number one, but these things happen when you are working from random parts of your brain. But the point stands: Defining why you are saving or what you are saving for is an important step. I have mentioned this before, and many (if not all) finance experts agree. Defining your goals in clear terms will help you reach them because it gives you something to reach for-like a house down payment-rather than just saying you need to save. It also can help prioritize and stick to the plan when other things come up or give you motivation, so it's a good mental boost.
11. I am not one to tell you to cut back on your mochas or coffee if that is something that you value, but are there things you can cut out that you don't value or that may be costing you? As an example smaller coffee, or getting one less a week saves not only a few dollars here and there, it also saves hundreds of calories a week. (Another win-win for the fitness and finance marriage.) Or Cable subscriptions you don't even use? (Watch one channel, anyone?) Look at your own spending and ask yourself: Are you spending within your VALUES? If not, can it be axed? This is a very personal choice in one's habits, but if you can find things you've been mindlessly consuming and get rid of them, it opens a lot of possibilities on where to find that extra money you are working to save.
12. Did you just get a new cost of living raise? 50 cents an hour is $20/week before tax. Maintain your current spending levels (with direct deposit, of course so you don't even know it's there anyway), and you'll start to see your savings grow a little bit faster with each paycheck.
13. Does your grocery store have a gas rewards program? If you're shopping there anyway, you may as well take advantage of the savings on gas that you can get. For many stores, you can save up to $1.00/gallon off, just for having the free grocery store key which definitely adds up. Just remember the golden rule: Transfer the amount of savings to your savings account(s) when you get home. (See item 5.)
14. Walk/Bike more often. Of course, as another way to save at the pump, you could always use your car less. And again, this is a win-win for the fitness and finance super-duo. (Yes, I just made it sound like it's a super hero. Deal with it.) Walking and biking keeps you fit, and the less you drive, the less you pay in gas, maintenance, and (in many cases) insurance.
There you have it! 14 ideas on how to START saving. Pick even one of them, and you should see your savings grow and, hopefully, have developed a habit of saving. This is nowhere near a fully comprehensive list, but some ideas to get started, so let your imagination run wild and watch the nest egg grow! Good Luck!