This step-by-step guide for how to save money can help you develop a simple and realistic strategy so you can start saving.
1- Record your expenses
The first step to start saving money is to figure out how much you spend. Keep track of all your expenses—that means every coffee, household item, and cash tip. Once you have your data, organize the numbers by categories, such as gas, groceries, and mortgage, and total each amount.
2- Budget for savings
Once you know how much you spend monthly you can start budgeting. Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending.
3- Cut your spendings
If you are spending much and think you are not saving enough, it might be time to cut back. Identify nonessentials that you can spend less on, such as entertainment and dining out. Look for ways to save on your fixed monthly expenses like television and your cell phone, too.
4- Set saving goals
One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—perhaps you’re getting married, planning a vacation, or saving for retirement. Then figure out how much money you’ll need and how long it might take you to save it.
5- Stablish your priorities
After your expenses and income, your goals are likely to have the biggest impact on how you allocate your savings. Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs.
6- Automatic savings
Almost all banks offer automated transfers between your checking and savings accounts. You can choose when, how much, and where to transfer money or even split your direct deposit so a portion of every paycheck goes directly into your savings account. What are you waiting for?