Ways to save money effectively
You’ve finally got a job that pays you regularly, so you don’t have to worry about this week’s sales or whether you’ll make enough money to cover your needs. What you must be wondering about now is the most effective way to save from your salary.
Saving money should start from the first salary you get, and not fall into the trap of delaying it until the next salary is paid. Here are some tips that will guide you towards saving effectively from your salary, regardless of the amount.
1. Set a budget before each salary
Now that you’re a salaried employee, it’s important to have a spending plan for your income before you get it. Decide which budgeting method or tool will work best for you, would you rather write it down in a notebook? Prefer a budget app? Or are you obsessed with spreadsheets?
Include payments you intend to make to yourself, whether for Roth contributions, deposits you make in your savings accounts, etc. But before that, you have to prioritize your basic needs such as housing, transportation, food costs, and saving money.
2. Set up direct deposit to save automatically
Saving from paycheck doesn’t have to be a chore, you can set up automatic transfers and withdrawals from your checking account to your savings or investment accounts automatically.
Check with your payroll officer about having two bank accounts for your direct deposits. For example, setting aside a certain percentage or dollar amount in a second bank account can make it easier for you to save money from your paycheck.
3. Track your spending
One of the reasons we fail to budget is because we fail to track our spending, we always assume we spend X dollars on groceries when in reality it is twice that amount. Tracking your spending will allow you to see how your salary has been used, and to review your spending for the past few months to find areas where you are spending too much.
4. Reduce your costs
The three budget areas that make up the bulk of what we spend are housing, food, and transportation. Cutting costs in these areas will free up extra cash from your paycheck for savings. If you own a home for example, you could consider refinancing your mortgage at a lower interest rate, or cutting down on grocery expenses by planning meals.
5. Look for offers
Home and car insurance isn’t the only area where you may be able to cut expenses. Before there were only 4 or 5 cell phone owners, but with all the prepaid plans and other alternative phone companies, you might be able to cut your cell phone bill in half.
6. Minimize the use of your facilities
Check connected devices that are not used frequently. Unplugging your cell phone and other electronic chargers when not in use can lower your electric bill.
As the weather gets hotter in the summer or cooler in the winter, fluctuations in utility bills are common. Before turning on the air conditioner, try to reduce the amount of sun entering your home, or consider turning on a fan instead of lowering the thermostat. And don’t forget to check your lights, LED lights use 75% less energy than incandescent lighting.
7. Make it difficult to access your money
When your money is difficult to access, you will find that it is not convenient to spend it, this is simply because it is not available for you to spend immediately, so it may be a good idea to put your savings money in a separate bank account that you do not have access to easily.
8. Reduce what you spend for online shopping
Online retailers have made spending money easier than ever, especially with options like one-click purchase. Don’t save your credit card information, and be sure to put obstacles to stop you from online shopping if you’re a shopaholic.
9. Look for low-cost entertainment ideas
With so many different subscription services out there, it’s easy to get more than a dozen that offer the same things as Amazon Prime, Cable, Netflix, Hulu, and Pandora.
Consider outdoor activities such as hiking or camping as alternatives to entertaining yourself at a lower cost. Also try to avoid costly social interactions. Host game nights or dine-in instead of meeting at restaurants to reduce your spending on entertainment and savings from your paycheck.
10. Remember, it’s all about paying yourself first
Paying yourself isn’t about getting an expensive handbag, a day at the spa, or a weekend trip. Paying yourself first is about saving for the future. You might have a health crisis, you might want to start a business, or you might want to buy a home , or simply have a comfortable retirement.