Helpful Money Saving Tips
It can be difficult to figure out simple ways to save money and how to use your savings to pursue your financial goals. This one step-by-step guide to “money-saving habits” can help you start to develop a realistic savings plan. (from BOA.com)
VIDEO: Five Saving Money Tips You Can Do Today!
1. Record your expenses
The first step to saving money is to figure out how much you spend. Keep track of all your expenses—that means every coffee, newspaper and snack you buy. Ideally, you can account for every penny. Once you have your data, organize the numbers by categories, such as gas, groceries and mortgage, and total each amount. Consider using your credit card or bank statements to help you with this. If you bank online, you may be able to filter your statements to easily break down your spending.
2. Make a budget
Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending. In addition to your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance. Find more information about creating a budget.
3. Plan on saving money
Now that you’ve made a budget, create a savings category within it. Try to put away 10–15 percent of your income as savings. If your expenses are so high that you can’t save that much, it might be time to cut back. To do so, identify non-essentials that you can spend less on, such as entertainment and dining out. We’ve put together ideas for saving money every day as well as cutting back on your fixed monthly expenses.
Tip: Considering savings a regular expense, similar to groceries, is a great way to reinforce good savings habits.
4. Choose something to save for
One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—anything from a down payment for a house to a vacation—then figure out how long it might take you to save for it. If you need help figuring out a time frame, try Bank of America’s savings goal calculator.
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)
Down payment for a car
Long-term (4+ years)
Your child’s education*
Down payment on a home or a remodeling project
*If you’re saving for retirement or your child’s education, consider putting that money into an investment account such as an IRA or a 529 plan. While investments come with risks and can lose money, they also create the opportunity for compounded returns if you plan for an event far in advance. More details in step No. 6 below.
5. Decide on your priorities
After your expenses and income, your goals are likely to have the biggest impact on how you save money. Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs. Prioritizing goals can give you a clear idea of where to start saving. For example, if you know you’re going to need to replace your car in the near future, you could start putting money away for one.
6. Pick the right tools
If you’re saving for short-term goals, consider using these FDIC-insured deposit accounts:
Regular savings account
High-yield savings account, which often has a higher interest rate than a regular savings account
Bank money market savings account, which has a variable interest rate that could increase as your savings grow
Certificate of deposit (CD), which locks in your money at a specific interest rate for a specific period of time
For long-term goals consider:
FDIC-insured individual retirement accounts (IRAs), which are tax-efficient savings accounts
Securities such as stocks or mutual funds. These investment products are available through investment accounts with a broker-dealer. Remember that securities, such as stocks and mutual funds, are not insured by the FDIC, are not deposits or other obligations of a bank and are not guaranteed by a bank, and are subject to investment risks, including the possible loss of principal investment.
7. Make saving automatic
Almost all banks offer automated transfers between your checking and savings accounts. You can choose when, how much and where to transfer money to, or even split your direct deposit between your checking and savings accounts. Automated transfers are a great way to save money since you don’t have to think about it and it generally reduces the temptation to spend the money instead.
8. Watch your savings grow
Check your progress every month. Not only will this help you stick to your personal savings plan but it also helps you identify and fix problems quickly. These simple ways to save money may even inspire you to save more and hit your goals faster.
Here are some additional tips that can help you save money and time, and can facilitate your savings and making the most out of what you already have.
• Do simple home and car repairs yourself.
• Lower the temperature in your house at night during the winter (raise the temperature in the summer).
• Turn lights off when you leave a room.
• Conserve water (turn off water when brushing your teeth).
• Use average billing for utilities and pay bills on time.
• Control your use of credit cards.
• Stop all optional services on your telephone.
• Shop at pawnshops for great deals.
• Pay your bills on time to avoid late fees, extra finance charges, and the costs of a bad credit rating.
• Make gifts instead of buying them.
• If you are incurring return check fees, evaluate your need for a checking account; shop around for free or low-cost checking.
Meals and Groceries
• Pack a lunch to take to school or work instead of eating out.
• Cut down on meals away from home.
• Do more cooking from scratch.
• Use leftovers (and plan for leftovers) in soups and casseroles.
• Limit food shopping to once a week; the fewer trips to the grocery store the better.
• Use coupons for items you buy regularly.
• Make a grocery list and stick to it to prevent impulse buying.
• Buy only what you need–don’t buy things just because they are on sale.
• Buy store brand products.
• Consider moving closer to work, if that’s an option.
• Use public transportation.
• Drive small cars that cost less to operate.
Health, Recreation and Personal Care
• Develop good health habits.
• Avoid tobacco, alcohol or addictive drugs.
• Study to improve your qualifications for the job you hold and let your boss know that you are interested in additional training.
• Investigate government or church operated child care; or share child care responsibilities with a friend or neighbor.
• Plan family activities that are inexpensive such as picnics and playing in the park.
• Eliminate cable television.
• Get movies from the public library instead of renting them.
• Use direct deposit. You will be less likely to spend money if it goes straight into your account.
• Carry only small amounts of cash in your wallet so you won’t spend it.
• Organize laundry so that a minimum number of loads is run.
• Buy clothing that does not need ironing or dry cleaning.
• Use immunization clinics.
VIDEO: HOW TO SAVE MONEY FAST – 5 TIPS FOR SAVING MONEY
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