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4 Simple Ways To Save Money

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The hardest part about saving money is sometimes just getting started. This step-by-step guide to saving money will help you create a realistic and simple strategy that allows you to save for your long- and short-term goals.

To start saving money, you need to know how much you spend. Track all of your expenses, including every cup of coffee, household item, and tip.

Once you have all your data, group them by categories, such as gasoline, groceries, or mortgage, and then total each amount. To ensure accuracy, you can use your bank statements and credit card statements. Don't forget any.

Record Your Expenses

Tip: To get started, you can find a free-spending tracker. Automating some of the work can be made easier by using a digital app or program. Bank of America clients can use the Spending & Budgeting tool, which automatically categorizes your transactions for easier budgeting in the mobile app or online.

Budget for savings

Once you know how much you spend each month, you can organize your expenses into a budget. So you can plan your spending and reduce overspending, your budget should show how your expenses compare to your income. You should include expenses that are regular but not every month like car maintenance.

Tip: You should include a savings category. Your goal is to save between 10 and 15 percent of your income. Click here for more details.

Find ways you can cut your spending

It might be time for you to reduce your spending if you find yourself unable to save as much as possible. You can cut back on entertainment and dining out. You can also save money on fixed monthly expenses such as television and your phone.

Here are some ideas for trimming everyday expenses:

  • Use resources such as community event listings to find free or low-cost events to reduce entertainment spending.
  • Cancel subscriptions and memberships you don't use—especially if they renew automatically.
  • Commit to eating out only once a month and trying places that fall into the "cheap eats" category.
  • Give yourself a "cooling-off period": If you are tempted to make a purchase that is not necessary, wait for a few days. You might be happy you did not buy it, or ready to save for it.

Set savings goals

Setting a goal is one of the best ways you can save money. Think about what you want to save money for. Perhaps you are saving for retirement, planning for a vacation, or getting married. Next, determine how much money and how long you might need to save it.

Here are some examples of short- and long-term goals:

Short-term (1-3 years)

  • Emergency fund (3-9 months
  • of living expenses, just in case)
  • Vacation
  • Down payment for a car

Long-term (4+ years)

  • Down payment on a home or a
  • remodeling project
  • Your child's education
  • Retirement

You might consider investing the money in an investment account, such as an IRA and 529 plan. Although investments can be risky and may loss of money, they offer the possibility of growth when the market is growing. This could be a good option if you have a long-range plan.

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