Saving money is one of the best things you can do financially, especially for teenagers looking to set themselves up for the future. Despite knowing this, many people struggle to save money on a consistent basis. In fact, Bankrate found that more than one in five Americans have no emergency savings. This can be a result of reckless spending, or being uneducated on savings.
You’ve probably been meaning to save money for a while, but just don’t know the correct practices or methods to do so. Learning effective methods to save money is an important steps to upgrade your savings and learn financial literacy.
Remember that life can get in the way of your savings. The car needs repairs, the roof is leaking, or a medical emergency comes up. Sometimes things just happen, and you have no way to avoid paying them. Those are things that you can’t avoid. Let’s talk about what you can do to save money more effectively.
Here are 7 proven ways to save money in 2023:
- Pay yourself first
- Set savings goals
- Get rid of unnecessary expenses
- Automate your savings
- Create a budget and stick to it
- Pack your lunch (instead of eating out)
- Reduce unused subscriptions and memberships
1. Pay yourself first
Paying yourself first is a financial strategy that can greatly boost your savings. It is essentially putting money into savings first before proceeding to pay any other expenses, such as debt or bills.
Paying yourself first is an excellent strategy, as it allows you to not worry about savings. Similar to rent and utilities, this method makes savings seem like a mandatory expense. At hearing this, you may perceive this as a bad thing, but really it is only doing you good as it encourages you to save money.
Another reason to follow this strategy is that if on the other hand you decide to wait to save money, then there may not be much money left to save. If you wait to save money until the end of your spending, you may not be able to muster the amount you initially wished to put away.
2. Set savings goals
To save consistently, you need to visualize what it is you are actually trying to accomplish. That’s where goals come in. Goals act as motivation and can give you a clear focus on what you want to achieve. They keep you on track and allow you to track your progress. Setting savings goals can help you achieve your desired outcome.
Goals can be either short-term or long-term. Whatever the goal may be, make sure that it is specific, measurable, attainable, relevant, and time-bound (SMART). Remember that when trying to accomplish your goals that you should strive to be both consistent and disciplined.
3. Get rid of unnecessary expenses
There are numerous harmful spending habits that are killing both your financial situation and savings. This can be a result of eating out too much, not utilizing discounts, or overspending at the grocery store.
Maybe it’s a gym membership that you only use 3 times a month. Or maybe it’s you opting you to use your car when a simple walk or bike ride would be easier and more cost-efficient. Whatever it is, identify your nonessentials or unnecessary expenses and minimize/eliminate them.
If you’re not able to save as much as you like, then it might be time to cut down your expenses.
4. Automate your savings
Automating your savings is useful to reduce the effort and stress that can come with saving money. Automating transfers, or automatically setting aside a sum amount at certain intervals, your savings will grow without any additional work on your part.
This strategy is especially helpful when you wish to reach a desired goal. By automating your savings and saving a certain amount each time, you can easily figure out how long it will take to reach your goals.
There are many apps and websites out there that can automate this process for you. Additionally, check to see if your bank has an option to put this process into place.
5. Create a budget and stick to it
Just like saving money, creating a budget and sticking to it is something that requires discipline and focus.
The best way to create a budget is to first identify and track your expenses. This should expose what your expenses are relative to your income. Next, aim to cut your expenses (as we mentioned before) and spend under a certain amount each month. Finally, assign a certain amount to your savings. Consistency is key with savings. Make sure it is something that you pay attention and stick to.
20% of your income towards savings is a percentage that most strive to save. However, most people’s situations are different, and the percentage will vary from person to person. Fixate on a number that works with you, but is not too comfortable so that you are not improperly allocating your income.
6. Pack your lunch (instead of eating out)
Finding everyday savings is crucial. The most prominent of these is an alternative to eating out. The average American spends about $3,500 on eating out every year, which can leave a crater in your wallet. Packing your lunch instead of eating out is a great way to minimize costs on one of your most notable expenses.
According to WealthFit, you could save approximately $1,200 every year just by packing your lunch. This money can be used to add to your savings or other financial plan.
7. Reduce unused subscriptions and memberships
Let’s face it. You don’t need 3 different streaming services when you only really watch on 1 of them.
You could be potentially paying for subscriptions and memberships that you don’t even use. Review your bank statement and search to see if there is any subscriptions that you are paying for without realizing. Another trap you may have fallen for is signing up for free trails. There is a chance that you forgot to cancel, and are now paying for the full subscription.
Get rid of these recurring expenses, as they are one of the top savings-killers.
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