Learn How to Save Money Fast by Learning These 7 Ways to Save Money
We can all agree on one thing. Having money is better than not having money, but in order to achieve this, you must learn to save.
Most people want to save more money, but without a solid plan and good habits, it’s easy to fall short of your financial goals. Life interferes, money slips through the cracks, and before you know it, the end of the month arrives, and you’re no closer to saving them when you were when you started the month.
Through my own money-saving journey, I’ve found that the key to saving more is by leveraging simple, but effective saving techniques, which is why in this article I will share with you seven tricks you can use to save more money fast.
1. Appreciate the Savings Process
When you’re just starting out with saving, it’s easy to discount your efforts. Even if you’re only able to set aside $5, focus on the fact that you’re saving something.
Now many people start their financial journey with thousands of dollars in the bank, and $5 is always better than zero. During the early days of your saving journey, you should be more focused on creating money-saving habits than worrying about how much money is beginning to add up in your bank account, which is why you should give yourself permission to start slow.
When I was first starting out, it was quite discouraging to admit to myself that I could only save like $20 a week, but what helped me overcome this mental roadblock was analyzing this savings figure.
For instance, $20 a week isn’t much, but it amounts to more than $1000 in a year, which, when I first started saving seems like quite a bit of money.
As long as you’re moving in the right direction, you’re focused on what really matters, establishing the habit of saving. Once you gain momentum, you can take a look at your budget and figure out savings opportunities that you may not have immediately recognized.
If you’re not sure where to start or how much you should be putting in your savings account, here’s a good method.
Start by saving 1% of your monthly income and increase that by 1% every month. If you’re in $3000 per month, save $30 the first month, $60 the second month, $90 the third month, and so on.
2. Set Up Automated Deductions
One of the biggest things holding people back from saving money is the perceived effort it will take. They think that in order to save money, you must spend hours a month calculating your income, budgeting, and checking your bank balance, but in reality, saving money takes next to no time at all when you automate the process.
Setting up automated deductions from your pay to your savings account can get you started saving money without even thinking about it. By filling out a few forms to your employer, you can have part of your paper automatically read into your savings account, making saving money literally effortless.
I personally use automated deductions in my money management plan, and I think the savings technique has been so successful for two primary reasons.
- First, it allowed me to pinpoint exactly how much I wanted to save. When I first started using this technique, I was earning around $2000 every pay, and I knew I wanted to try and save $500 a month, so I set up a 12.5% deduction for my pay, which allowed me to consistently hit the savings target.
- Second, automating my savings took the thought of having to save off my mind allowing me to focus on other important things like improving my skills in order to make more money. I often preach that once you have a soul-saving technique, in effect that making more money is the number one way to save more, and by freeing up my mental bandwidth, I was able to take on more freelance work, earning the extra income to boost my savings.
Now, depending on your level of financial discipline, it may be worthwhile to set controls on your savings account, so you aren’t tempted to spend it. For those with less financial willpower, I often recommend setting up an untouchable account, which is an account that you open and then give the banking information and access card to a trusted family member, a friend.
This way, you’ll have no access to the account meaning that, even if you wanted to spend the money that was accruing in that account, there would be no way that you could.
3. Set Savings Goals
For some people, the best way to save is to have short and long-term goals. For instance, a short-term goal may be to build a $5000 emergency fund within the next year so that you can have money set aside for emergency purposes.
By setting goals around your savings efforts, you create a target to work towards which will keep you much more focused on taking the necessary actions that will lead to increase savings.
Moreover, by setting up these goals you can link them directly to the benefits you will realize when the goal is achieved. For instance, if you were able to achieve your goal of building a $5000 emergency fund, the benefits you would realize would be less financial stress in a sense of control in your ability to whether any unfortunate circumstances.
Other common short-term goals include saving for a vacation, a new car, or a down payment for an investment property.
When it comes to long-term goals, having a robust plan to achieve them is crucial in their realization.
The truth is that when goals lie way in the future, it can be easy to underestimate the importance. For instance, 70% of American parents intend on saving up the full cost of tuition for their kids. However, only 29% of them are on pace to actually accrue the money will take to cover this ever-increasing expense.
In an effort to save to achieve both your short-term and long-term goals, be disciplined about not making withdrawals from your savings accounts unless it’s a life-or-death situation. Some banks apply penalty fees if you over a certain number of withdraws from a savings account in a given period, which is an excellent way to incentivize withdrawing funds.
4. Question All of Your Purchases
It’s said that a dollar saved $2 earned, and when it comes to saving money, you need to make sure that your expenditures are in line with the life you want to live. For instance, you may feel inclined by a $5 coffee every day, but deep down you know that saving that money and putting it towards a family vacation would be much more worthwhile.
Now, we all have vices but the point I’m trying to make here is that you must try your best to spend thoughtfully.
Every time you take out your credit card, ask yourself
“Is spending money on this item is bringing you closer, or pushing you further from achieving your short and long-term goals?”.
Chances are that this thoughtless spending will only grant you a momentary high, whereas if you were to save that money and achieve your savings target you would gain a much greater sense of satisfaction.
I know this is easier said than done, so let me share with you two ways I’ve been able to curb my own spending in the past.
- One of the most straightforward ways to decide on purchases is to determine how many hours of work will take you to afford it. For example, if you’re in $25 an hour, and you want to buy a $2000 laptop, you should think about whether that computer is worth 80 hours or roughly two weeks of work.
- The other way you can question your spending is by using the stranger test. If you’re unfamiliar with this money-saving trick, let me explain how it works.
Every time you think about buying something, picture a stranger standing in front of you. On one hand, you have the item you want to buy, and on the other hand, they have their monetary value in cash. Which would you rather have? In most cases, cash is probably more appealing.
When taking this approach on a regular basis, you will start to see yourself continuously picking the money over the item, which solidifies your position in not splurging, and instead of keeping that money in hand.
5. Budget for Your Savings
One common reason so many people make it to the end of the month and wonder why they haven’t saved any money is that they never budget to save money in the first place. Don’t make this mistake, instead, you should be building a monthly budget that when followed, will allow you to hit your savings target and allow that piggy bank of yours to grow.
Two of my favorite budgeting methods that have savings built into them or the 50/30/20 method and the 80/20 method.
In the 50/30/20 method, you allocate 50% of your income towards living expenses, 30% towards entertainment, leaving you with 20% that will go right into your savings account. I find this method to work great as it delineates how you can spend your money, but not everyone wants to have parameters around their discretionary spending, which, so I often suggest the 80/20 method instead.
In the 80/20 method, you allocate 20% of your income towards saving, and the rest is up to you how to spend it. Using both methods, you will be sure to start saving money especially, when the savings amount is systemized to the use of automated deductions.
6. Try the Anti-Budget
I constantly preach the benefits of budgeting. I know that I can convince everyone to adopt this money-management technique. The truth is that not all strategies worked for everyone, and not everyone is a natural saver.
In fact, some people are quite opposed to the idea of creating budgeting spreadsheets or writing down all of their expenses. Those who are opposed to budgeting often complained that it takes too much work, that it’s too restrictive, or that it could be too hard to agree with your significant other where all the money should be allocated.
If any of these situations resonate with you, then perhaps the money-management method you should be using is the anti-budget.
This method involves assessing how much money you tend to spend on a monthly basis and then backing out how much you want to save. Then, once you have this figure, you can spend it freely as the amount of money aimed to save will already be accounted for.
If you’re struggling to make ends meet, then I don’t believe that this is the ideal budget to be using, however, if you were strongly opposed to budging, then this could be a good tool to break the ice in your money-management journey.
7. Set Small Rewards
Saving money often means making sacrifices and continuously giving up things can wear you down over time.
If your self-imposed restrictions on spending are too strict, you may be setting yourself up for failure.
It’s like going on a really strict diet. If you deny yourself of everything for way too long, you may snap and undo all of your good work, this is why I think it’s beneficial to set up an occasional reward for yourself.
For instance, if you have a long-term goal of saving $10,000, and that means giving up that daily latte and your monthly happy hour with friends, set mini-goals along the way. Once you had $2000, reward yourself with a latte or a couple of drinks with friends to enjoy a mini celebration of all the hard work you’ve been putting into your money savings journey.
In short, there’s no reason saving money has to be a completely miserable experience, and beginning yourself small rewards, you’ll reinforce the idea that you’re doing something that will quite literally pay off in the end.