Saving money is essential to building wealth and giving you a sense of security. In order to save money, you need to spend less than you earn.
For many, this is often easier said than done, especially when you have to give up things you really want. However, when you are mindful, there are plenty of ways to begin saving money whatever your age or income level.
Here are some tips which can help you learn to save money.
When considering how much to save, the first step is to set short-term and long-term goals for yourself. Your goals will help you establish where you are in your financial journey. Establishing goals will help you know the amount you want to save.
To reach a savings goal, you need to make a budget. Having a plan for your money and being able to track it will show you how much you are spending and where you can afford to save more.
The 50/30/20 rule divides your income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment. Using a 50/30/20 calculator can help determine how much of your finances need to go into these categories.
Needs = 50% of your income: Necessities are the expenses you can’t avoid. The portion of your budget should cover costs such as: housing, food, transportation, insurance, basic utilities, etc.
Wants = 30% of your income: Knowing the difference between needs and wants can be difficult. Generally, wants are the extras that aren’t essential to living or working. These may include monthly subscriptions, travel, entertainment, meals out, etc.
Savings and Debt = 20% of your income: You should devote this part of your income to pay down existing debt and create a comfortable cushion to avoid taking on future debt.
Telling yourself how much you want to save isn’t a goal. You have to know what you are saving for, how much money you need to save, and when you need it.
Track savings for your goals using an Excel spreadsheet, a financial tracking app, or a financial planner.
You can also find new ways to save money by:
Options like these can help you save money and get you cash back when shopping online or using you card.
You should figure out your needs and how much they cost before figuring out how much you need to save. Directly depositing money from your paycheck into a savings account and your 401k allows you to build wealth and create healthy saving habits.
When shopping, plan your purchases to avoid coming out with more than you went in for. Make a list of exactly what you want to buy, and how much you’re going to spend. This way you can stick with your list and be less likely to make impulse purchases or get things you don’t need.
The information on this page is accurate as of January 2021 and is subject to change. First Financial Bank is not affiliated with any third-parties or third-party websites mentioned above. Any reference to any person, organization, activity, product, and/or service does not constitute or imply an endorsement. By clicking on a third-party link, you acknowledge you are leaving bankatfirst.com. First Financial Bank is not responsible for the content or security of any linked web page. Member FDIC / Equal Housing Lender.
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