Lots of people struggle to save money and recent surveys showed that most adults lack sufficient savings. Building savings is a fundamental part of good financial management and everyone should create a solid savings plan. Most people should be able to save a percentage of their income by adopting smart spending habits. With that in mind, here are some of the best money-saving tips to increase your savings.
Set a monthly savings target
It is common for people to set a monthly budget based on their expenses and then deposit whatever is leftover into their savings. The problem with this is that it doesn’t encourage you to reduce your spending. A better approach is to set a monthly savings target and then budget your spending based on the remainder of your salary. Keep in mind that the more you deposit into your savings account each month the quicker you will grow your savings. Most financial experts recommend that you aim to save between 10% and 15% of your salary each month. It is a good idea to transfer your savings into a separate account at the start of each month. According to the University of Chicago, you should view your “savings as the first bill that you pay each month.” There will be less temptation to overspend on your budget if you have already deposited your savings into a separate account.
Cut unnecessary spending
It should go without saying that if you spend less then you will save more. The majority of people have multiple unnecessary expenses that they could easily cut from their budget. Streamlining your expenses and making smarter spending decisions is one of the most effective ways to grow your savings. Think carefully about whether you truly need something before making a purchase and try to identify ways to cut your monthly outgoings. For instance, you could switch to a cheaper energy supplier to save money on your utility bills or use Macy’s coupons to get discounts on new clothing. Becoming savvier with your money and spending can lead to substantial savings over time.
Sell your car
Running a car is expensive and can costs hundreds of dollars a month when you factor in insurance, fuel and maintenance costs. Getting rid of your car can save you thousands of dollars each year. Plus, you can boost your savings using the money made from selling your car. That said, not having a car will limit your freedom to travel, so it’s always worth checking that you have other means of transport before selling your car. Fortunately, most locations have excellent public transport links and getting the occasional taxi can still work out much cheaper than running a car.
Having savings will give you the freedom to make significant purchases and improve your living standards. Having a healthy pot of savings will also reduce financial stress as you will be able to repay debt faster and will have funds to cover financial emergencies. Use the above tips to make smarter spending decisions and start building your savings today.