How to Save Money
Have you ever bought into a ‘get rich quick’ scheme? If you have, you probably didn’t consider it a ’scheme’ at the time, and if you haven’t, you’ve probably at least come across a few at some point or another. One of the easiest ways to know a money-making program is a bad apple is when they charge an upfront fee.
The easiest way to make money requires no up-front fee. Have you ever heard the statement ‘a penny saved is a penny earned’? Yup. The easiest way to make money is to save what you already have, and the best way to get rich is to make that money work for you.
When I say save money, I mean save by not spending, not by spending less.
It sounds the same, right? Sure it sounds the same, but it is different. Here’s an example to show you the difference:
You got to the mall to buy a new shirt and you plan on spending about $20. You’re browsing your favorite department store and then you see the perfect shirt at the price you planned. Then you see a pair of jeans that match the shirt perfectly, plus they are marked down from $70 to $45. You save $25, right? Sure, you save $25 by spending less, but if you stuck with your original plan and only bought the shirt you needed, you would have saved another $45. Altogether, you saved $70 by not buying those pants.
Pay Yourself First
This expression is often used by finance professionals to say that the first thing you should do when you get your check is pay yourself first, or put your savings aside first. Your savings should just be what’s left over.
Budget Your Money
In order to determine how much you can save each month and how to save money, you need to figure out how much you spend. Write down everything you spend money on and decide which expenses you need and which you could do without. Make a budget saying what you can and can’t spend your money on each month. Be as detailed as possible.
If you can’t save, you need to make changes.
If you can’t save at least 10% of your income, something needs to change. You either need to downgrade your lifestyle, find a better job, get another source of income, or go back to school to get a better job. You should look at saving money as you do any other bill, and if you make it automatic by paying yourself first, it won’t be hard.
How will saving make you rich?
Just saving money is not enough, you need to put that money to work for you. If you stash it under your mattress, it will lose money because of inflation. Start investing my opening up a 401K or IRA with your employer. You can also invest in stocks you choose, mutual funds, and bonds.
Before you start investing, pay off debt and build an emergency fund.
Start a 401K or IRA right away, but don’t start maxing out your investments until you:
1. Pay off debt. If you are paying a high interest rate on your debt, the money you earn on investments will go to waste. Pay off your debt as soon as possible.
2. Build an emergency fund. What will happen if you need a $2,000 repair for your car that’s not covered by insurance? What will happen if you lose your job? Can you afford it? Put aside 3 to 6 months of living expenses in a savings account to ensure you won’t be destroyed if there’s a financial emergency.
If you want to get rich, you need time and money on your side. You need to know how to save money. Save whatever you can, and start doing it right now!
How to Save Money on Groceries