We have a variety of posts around here about specific ways to save money, but what about a general money saving strategy? How does one get started on the path to saving a million dollars?
As the New Year came along, I’ve seen a lot of interesting “tricks” people have published to help you save money. Here are a few you may want to consider as well.
Make It Automatic
Don’t make savings be the last thing you do, make it the first thing. Most banks/employers with Direct Deposit let you split your deposit. So take that amount you think you can save out of your current paycheck before it even hits the bank. So if your check was $3000 and you wanted to save $100, have $2900 put into checking and $100 put into a savings account.
Don’t Give Yourself a Raise
So you’ve made a budget that works for you, and then comes your yearly raise, or that new job that pays a lot more. What do you do? Most people adjust their spending to that new income (“Hey I can afford a nicer car now”), instead, continue to live on the old amount, and direct the entire difference to savings. Adjusting your standard of living is the biggest trap I see people getting into, if you can continue to live at your same level it’s crazy how quick your savings will build up (allowing you to live a truly luxuriously life before your peers).
Give Yourself a Challenge
Try to spend just $5 less on gas this month. Maybe that means carpooling, biking, one day etc… Then take that $5 a put it into savings. Try to eat just one meal less out, pack just one more lunch, etc… These are small things but they all add up, and hey maybe some of them are something you can stick to.
Make a Change
Try canceling just one service you subscribe to, and converting that money into money saved. Cable TV is a great candidate for this, because it’s often over $100 per month. But it could be something smaller, like a magazine subscription or a music service. In general I’m in favor of subscription services that replace other purchases (ie Netflix keeps you from going to the movie theatre), but try removing just one from your life and watch the savings build.
Save Your Change
This is literally small change, but whenever you get loose change stick it in a jar, and take it to the bank when the jar gets full. This is a pretty old school trick, just don’t be lazy and take this to CoinStar. Machines outside of banks that auto count change often either take a cut or only let you get gift cards in exchange. Why limit it to coin change? What about a few loose dollars?
Big Picture
What’s the key in all of these? It’s putting away money first, and then adjusting your spending around it. If you wait until the end of month (or your paycheck) to put away savings, you’ll always be running short. If you give yourself spending constraints, you’ll usually be able to find a way to deal with them.
