You’re ready to start saving money? Here are a few steps to start making those money goals reality.
- Set your budget before the month begins
In order to get ahead with your finances, you need to think ahead. You need to set a budget for each month, and you need to set that budget before the month begins. Better yet, try to plan your budget for 3 or more months. By doing this you can plan for unique spending coming up (like a birthday, registration fee, etc.) and move money around to make room for it.
- Budget to zero
You must tell ALL your money where to go. You must assign every dollar a name, meaning all your income has a place in your budget. If there is any money left over after deducting your expenses, put it toward your money goal, like building your savings or paying off debt.
- Track Your Expenses
Track every dollar that you spend. Even your impulse donut buys in the morning. Those dollars add up and it will help you calculate exactly where your money goes.
- Review your spending habits.
Now that you are tracking your spending, its time to review your spending habits. Are those morning coffee runs adding up? Your spending habits could be costing you a lot of money that could be used for your money saving goals.
In order to start saving for your goal, you will need to cut back on your spending. For example, you can make coffee at home. You can take your lunch instead of buying lunch. You don’t have to completely stop spending on the things you like to save, you just need to do it in moderation. Like, maybe you can treat yourself to lunch on Friday and bring your lunch the rest of the week.
- Create a “Miscellaneous” category.
Sometimes things will pop up or we forget expenses. Make room for this in your budget. Create a line in your budget that says “Miscellaneous” with $50 or so in it.
- Budget for annual expenses.
There are some things that aren’t in your monthly budget because they may be due quarterly or yearly, like your car registration or your insurance premium. These items shouldn’t come as a surprise so you should plan and adjust your budget during the month its due, or you can break up the payment and save a little each month.
- Save for big purchase a little at a time.
You can prepare yourself for a big purchase by saving a little at a time. For example, if Christmas seems to stress you out each year and you end up spending a lot of money, start saving for it throughout the year rather then waiting for December. Calculate how much money you need then take that amount and split it by 12 and save a portion each month.
- Budget for fun.
Living on a budget doesn’t mean you can’t have fun. All work and no play will make you more likely to cheat on your budget. Add a line into your budget for “fun” and treat yourself.