Budgeting and Saving in 4 Steps


Saving money is hard. For many people making ends meet alone may seem impossible from month to month. There are definitely situations where you simply don't make enough money and saving any money at all is impossible. Though, for most people, we were raised in households where we observed bad savings habits or we weren't taught them at all and with some small tweaks and lifestyle changes you can get on the right path to saving money. 

1. Take an audit of all of your income and expenses - This sounds fancy but you're really just writing down what money comes in every week, two weeks or month (however often it comes in) and all of the money that goes out. This is going to involve writing down everything that you spend in a month no matter how frivolous or small. If you buy a pack of gum that costs $1, you write it down. This step is important because it lets you know if you're in the green or red each month. 

2. Classify your expenses - Now that you know what you spend each month, you need to figure out what's important and what's not. Take that list, go through each expense and write down whether is something you need or something you want. The whole point of this is to figure out what you can eliminate in the name of savings. There are going to be things like groceries and diapers that you can't eliminate but maybe you discovered that you spend way more money on clothing or shoes than you thought you did.

3. Set your savings goals - Having a specific goal that you're saving for seems to help when learning to save versus just saying that you're going to savemore. That specific goal can be a dollar amount or it can be towards something like a vacation. Having a goal helps you to feel accomplished when you work towards it and get closer to reaching that goal. Always set attainable goals. Failure to do so will result in you overextending yourself, possibly giving up or not keeping it up long term. Setting unreasonable savings goals also make it so that you feel like all you're doing is sacrificing and not having fun anymore which also leads to quitting.

4. Make the money inaccessible - Once you set a goal, you need to put the money somewhere that you can't easily get it. The easier it is to get the money, the more likely you'll find a reason to spend it. This can mean doing something like having the money at a bank that doesn't have a branch near your home and declining to have a debit card for the account or entrusting it with someone responsible that will hold you accountable to your goals. Doing something like this makes it so that if a real emergency actually does pop up, you'll be able to access it but for made up emergencies, your cash will be safe.

With everything, do what you can even if all you can is save your change. The sooner you start learning to save, the sooner it will become a habit. Once its a habit, you'll be sure to incorporate it into your life as you start to make more money rather than just increasing your spending and never saving at all. 
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