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When you are thinking of long-term finances to set up for yourself, sometimes it helps to break the process into pieces instead of trying to handle the whole budgetary bite at once. In this economy it is easy, or sometimes inevitable, to live paycheck to paycheck. But there are little tips, tricks and spending habits that can help you get better at saving money.
10 Habits of People Who Are Good at Saving Money
Whether it is a high-yield savings account or a stash of cash under your bed, there are many ways to save money. Sure there are better or worse ways to store away your acorns for a looming winter, but there is a common list of habits most people have that are good at saving money. Here’s a look at 10 ways to save money:
- Have one or more retirement accounts.
- Automate your savings with automatic transfers.
- Know the difference between what you want or need to spend money on.
- Create a better budget for yourself.
- Set savings goals and stick to them.
- Don’t rely too heavily on autopay with your bills.
- Have a separate savings plan for major purchases.
- Use the 30-day rule when shopping to delay spending.
- Have three to six months’ worth of expenses in a savings account.
- Start small and live beneath your means.
1. Have One or More Retirement Accounts
It is no surprise that good savers are preparing for retirement well before they reach the age of 65. Years of savings go into a proper retirement plan, but diversification into different account types can build your retirement savings and portfolio nicely. Here are some retirement savings accounts to consider putting money into now:
- Roth IRA
- Traditional IRA
- 401(K)
- Simple 401(K)
- SEP plans
- 403(B)
- Government Plans
- Defined Benefits Plan
2. Automate Your Savings With Automatic Transfers
By having money transferred out of your account from each paycheck automatically it makes it easier to not spend it. These savings come from automatically allocating your funds to specific goals. Here are a few ways you can try automating your savings:
- Have a percentage of your paycheck automatically deposited into a separate savings account.
- Make sure to put your money into a high-interest savings account to get a better interest rate and earn more money automatically.
- Try different budgeting apps and take advantage of the automatic savings tools features.
- Set up direct deposit for your paycheck. Instead of one lump sum, have a percentage deposited into an account specifically for necessities like rent, electricity bills, car insurance or phone bills.
- You can also set aside money for each savings goal you have separately and keep track of your savings progress.
3. Know the Difference Between What You Want and What You Need
Shopping is fun and you should definitely treat yourself now and then. However, when it comes to savings, little edits go a long way. Though you may want every streaming service, you don’t need each one on the market. Canceling just a few can really add up throughout the year. Once your shelter, food, debts and bills are covered, you can set some money aside for savings and anything extra is up to your discretion.
4. Create a Better Budget for Yourself
Whether it is something big like when you refinance your mortgage, or something small like when you intentionally purchase more energy-efficient lightbulbs, creating and sticking to a budget will only boost your ability to save. You could even get very specific with your budget and try something like a 50/30/20 budgeting percentage rule which would look like this:
- 50% of your paycheck is allocated to needs.
- 30% of your paycheck goes to wants.
- 20% of your paycheck is for savings.
5. Set Savings Goals and Stick To Them
Though there are multiple ways to save, the important thing to remember is that you are doing so to reach your short and long-term goals. Goals will vary depending on your unique financial position but make sure to set both achievable and aspirational ones. You should save separately for these with accessible deposit accounts or accounts with term lengths such as CDs.
Short-Term Savings Goals | Long-Term Savings Goals |
---|---|
A new car | Pay off student loans |
Down payment for a house | Retirement plan |
6. Don’t Rely Too Heavily on Autopay With Your Bills
Autopay is incredibly convenient, sometimes too much so, as you may forget you’re paying for something you no longer like or need. Common culprits of this include streaming services, app subscriptions or club memberships. Make sure to go over your funds with a fine-toothed comb to see where you can cut back or at least stop the autopay of certain fees and bills.
7. Have a Separate Savings Plan for Major Purchases
It would be magical to just conjure up large sums of money on a whim, but unfortunately saving big chunks comes with some planning and preparation. Say you want to save $1,000 in the next 30 days, which is roughly $250 every week. Here are some ways you could get there quickly:
- Start a temporary side hustle for additional income. Don’t spend anything you make from that gig but instead put it all in a savings account.
- Have a garage sale or start selling some of your unused items around the house. This could create a good amount of passive income which can go toward your big ticket purchase.
- Switch your traditional savings account to a high-yield savings account as banks pay interest in higher percentages on those accounts.
8. Use the 30-Day Rule When Shopping to Delay Spending
A good rule to follow when shopping is the 30-day rule. If you see something you want to buy, don’t immediately run to the checkout. Instead, you should wait 30 days to see if you still want it at the end of that duration. It is a great way to cut back on impulse purchases and help define what you really want to spend money on. You may be pleasantly surprised as to how short that list is and how much you’ve just padded your bank account.
9. Have Three to Six Months’ Worth of Expenses in a Savings Account
Having an emergency fund or savings account that is strictly to cover unforeseen expenses or events makes any other savings you have managed to store away safer. The amount of money will vary depending on your personal income and expenses but having this amount saved separately, apart from other plans or goals, will give you peace of mind should you lose your job. It will also give you an extra window of time in which to sort out your financial situation.
10. Start Small and Live Beneath Your Means
It’s wonderful if you get a raise or a better paying job, but just because you earn more money doesn’t mean you should spend more. In fact, quite the opposite is true. You should stick to the budget you had when you were making less and put all additional funds into some type of savings account.
Final Take To GO
It may seem at times there isn’t enough money to go around. However, if you take some time and sit with your finances, you may start to see patterns you can avoid or where you have room to edit your expenses. Making more money is great, but it is not a necessity to save more money. You can start saving money right now with just a few tweaks to your budget.
FAQ
Here are the answers to some of the most frequently asked questions regarding saving money.- How can I save $1,000 in 30 days?
- Here are some ways you can save $1,000 in 30 days:
- Start a temporary side hustle for additional income.
- Have a garage sale or start selling some of your unused items around the house.
- Switch your traditional savings account to a high-yield savings account.
- Set savings goals and stick to them.
- Use the 30-day rule when shopping to delay spending.
- Here are some ways you can save $1,000 in 30 days:
- How to save $100 per week?
- Here are some creative ways to save $100 per week:
- Automate your savings with automatic transfers.
- Know the difference between what you want or need to spend money on.
- Create a better budget for yourself with budgeting percentages.
- Here are some creative ways to save $100 per week:
- How to save up $10,000 fast?
- Here are some saving tips to start you on your savings journey of saving $10,000:
- Set savings goals and stick to them.
- Don’t rely too heavily on autopay with your bills.
- Have a separate savings plan for major purchases.
- Use the 30-day rule when shopping to delay spending.
- Start small and live beneath your means.
- Here are some saving tips to start you on your savings journey of saving $10,000: