A new year has begun and with it you can adjust your financial state of mind and can start doing the things you need to do to save more money this year (or to start saving money in general). In the past you may have tried to save money and made a valiant effort but may have failed.
Using a flip-flop approach and saving money vaguely will not work in the long run. You need to take a dedicated approach and then just dive right in. So let’s do that now!
1- Be Committed to the Process
If you are not in savings mode in your mind then it will not translate to saving money in your day-to-day life. You have got to get into the right state of mind. Acknowledge to yourself that saving money is good for you in so many ways. It offers a safety net in the event that you lose your job or cannot work for a period of time; it provides you with money if unexpected expenses were to surface and it helps you to save for things you want in the future.
2- Everyone Can Save
No matter whether you earn $20,000 a year or $200,000 you can save money. The person earning the former may not be able to save as much monthly on account of household expenses but they can still save.
It may involve making some compromises in your life such as packing a lunch for work, not going out as much and taking the bus to work instead of driving your car but it can be done. A good book to read to help you get on the right path is David Chilton’s The Wealthy Barber.
3- Know How Much Money You Have to Work With
To be able to save effectively this year you need to keep good financial records. Yes, there is no getting around it- you have to change the way you organize and spend your money. You need a budget. The word budget seems to rhyme with boring for many people but really it is one of the most effective financial tools you will ever use.
Buy a ledger if you are a financial person to start your budget in. If you are a regular person like me who has no education in financial matters but has learned as you have lived then buy a blank book that you can use to record the money you are earning (on a weekly, bi-weekly or monthly basis), the bills you have to pay and the money you are spending. Once you have everything written down in front of you then you will be able to see where you can make alterations that will give you room to save money.
4- Think of Your Savings as a Bill You Have to Pay
When your phone bill is due you pay it, right? The same is true with your rent or mortgage, right? And your power bill? Well you have to view your savings in the same manner. Think of them as a fixed expense that must be paid. If you don’t look at saving money in this way then it simply won’t get saved because other expenses and bills will always be more important and will take precedence. Make it matter!
5- Save Your Change
Saving change sometimes seems easier than saving bills because it is smaller and you pay less attention to it. Use this to your advantage. Find a jar or container and start saving your change in it. If you find coins on the street then put them into the jar. Empty your pockets and your wallet at the end of the day and put the change in the jar. After six months has passed (or you can wait until the end of the year if you prefer) count the change in the jar. Buy coin wrappers and take the money down to the bank and put it into your savings account. Decorate the container or jar to give it an appealing look to it so you will want to constantly put change into it!