Saving money can seem like a foreign concept when everything already feels tight. At this point, you feel like you don’t have the space to buy the things you desire or save for your dreams.
Maybe you’re living paycheck to paycheck, but it doesn’t have to be that way. There is always a way to improve your situation, and you don’t have to accept that tight budget.
It’s all about financial knowledge. Learning about how you can improve from your current situation will be the way for you to get out of it.
People often feel like poverty is something you can’t escape, but it couldn’t be farther from the truth. Here are things you can do to change your mindset and begin working on your finances.
1. Examine Your Budget
You may have been working on a budget, or maybe you haven’t. If not, it’s all the more reason you should create one. People don’t know how much they spend on one thing until they put it on paper (digital or otherwise).
The weekly taxis or monthly subscription plans are taking more of your money than you realize.
If you haven’t begun making a budget yet, a good rule is the 50/30/20 allocation. You allocate 50% of your salary to essentials, 30% to personal expenses, and 20% to savings.
“Do not save what is left after spending but spend what is left after saving.” - Warren Buffett
Yes, 20% of your income may not seem like much, but everything adds up over time. For others, it can seem impossible to save that much, which is why you need to list everything down first.
Once you have the allocation, you’ll be able to categorize spending: things like bills, rent, and food fall under essentials. The items you have that aren’t necessary to survive will fall under the 30%.
Don’t adjust your budget just yet if you see yourself needing more for essentials. Instead, ask yourself the question: "how can I save more money?"
The solutions can be simple actions like:
- End subscription plans you aren’t using.
- Turn the lights off when you don’t need them.
- Use more affordable services.
- Run appliances during off-peak hours when electricity charges are lower.
Only when you feel like you’ve run out of options should you consider making adjustments in your budget. Try to keep the 20% intact for as much as possible because it will be your path to saving money.
2. Take Advantage of Deals and Discounts
Deals and discounts will be your best friend if you want to save money. Each dollar saved can be added to your savings.
Think about it this way: after saving 5% off an essential, you can allot that 5% to your savings.
Many government-funded programs can help you save money if you are low-income. Check for utility programs and other savings directed at people who aren’t earning as much.
You could end up saving hundreds of dollars in bills.
You should always chase after discounts when shopping for essentials and discretionary spending. Each one you take will mean you’re maximizing what money you have.
Buy discounted products at the grocery store or take advantage of offers for your next movie night out. All these things add up.
3. YouTube It First
When something goes wrong in the house, the first thing that comes to mind is hiring professionals. Other times, we settle for replacement without a second thought.
People often forget about the third option — researching using websites like YouTube.
Granted, some of the things you may want to do may be too dangerous to DIY. If that is the case, don’t risk anything and leave it to the professionals.
However, it can be surprising to discover simple solutions to problems people don’t normally encounter. For example, some repair work is easy to do on your own, and you can save a bit of money.
4. Opt for Prepaid Plans if Possible
A strategy that many businesses take advantage of is automatic payments. They commit your bank account to monthly payments without even sending any reminders.
Oftentimes, you’ll get roped into yearly plans and expensive fees without noticing them. Then you wonder why you keep running out of money when you check your available balance.
Always consider a prepaid option if they are available. The most common one would be cell phone providers. If you don’t need a monthly recurring plan, buy prepaid ones instead.
You only get to pay for what you use and lower your bill significantly. The same is true for other services you may have.
For example, if you’re paying monthly for a streaming service, consider only getting it if you need it — like if you have a favorite show you’re watching.
You can save a lot of money by cutting off the service for a while in the off-season.
You’ll find that many recurring services are ones you don’t need regularly. By limiting yourself to paying for them when you need them, you only spend money when it’s necessary.
You don’t have to commit monthly payments for things you don’t need.
5. Try to Adopt a No Spend Mindset
One thing you need to try for a week is the no-spend challenge. Try everything to avoid spending a week and see if you can do it.
- You’ll notice how many of your cravings and discretionary spending aren’t necessary. You don’t always need to order a meal from Doordash or shop on Amazon. What this does is it helps you take a step back from your habits and reevaluate them. You’ll see that some of your purchases aren’t essential to survival.
- If you’ve survived a week with minimal spending, you’ll be able to make adjustments to your lifestyle. Maybe you find free ways to get the things you want.
- You can also adopt this mindset when going out for activities. Instead of spending time shopping at a mall, take a walk in a park instead.
Try to find activities that don’t require you to spend much money to start. It’s about cultivating the mindset where you don’t have to place money as the first option.
6. Use All Available Free Resources
One of the advantages of living in the US is that the government pays for many benefits you won’t see in other places. For example, if you’re having trouble buying food, there are ways to get them for free.
These include:
- Community gardens
- Free farmers markets
- Food banks
- Food drive programs
You can also get free healthcare and services distributed regularly throughout the year. When you hear of offers like these, don’t hesitate to take advantage of them.
No one will hate you for taking the extra step to save money. These organizations expect that you use their generosity and make the most out of it.
If it isn’t something you’d want to do forever, remember that it’s only a temporary solution. You can do it while saving and stop when your financial circumstances improve.
Later on, you can give back by donating or contributing to these programs.
7. Seek More Affordable Loans and Service Providers
When it comes to maintaining income, one of the things that may be holding you back is loans. Maybe you are paying expensive mortgage or credit card interest rates each month.
It may seem like a cycle that will stay with you for a long time, but it isn’t your only option.
Many lenders will give you better terms and rates if you switch your loan to them. All you have to do is learn if they are offering refinancing or loan transfer services.
Check their rates and compare them to see if it’s better than your current loans.
If they are, you can transfer and alleviate a lot of the pressure your income gets. Remember to examine if your old loan has any other fees to account for.
There may be fees with the new lender, but they can usually roll in these amounts with the new loan.
Even a percentage drop from your loans can lead to hundreds of dollars freeing up. You can then use this money to pay debts faster, or put it into savings.
You can also find this alternative available with your service providers. Why not check out new phone plans or the internet?
Other companies may be offering promos that are hard to ignore, saving you more each month than your previous plans.
8. Compare Insurances First
Technology has made it easy for us to check insurance rates in the comfort of our homes. You no longer need to go from company to company, inquiring about what they have to offer.
There are even tools today that compare prices of insurance, whether home or auto. These programs factor in discounts and other promotions that may be available.
Another option to look into are the benefits that are available within your employment. Companies partner with insurance to get better deals, leading to more business.
That may also be true for your credit card company or other accounts you’re holding.
You’ll find that you can save money by switching insurance to a less demanding provider. There’s also the option to merge insurance policies, leading to a single payment at better rates.
Hunt for discounts and don’t be afraid to make changes that will help your financial situation. Rates often change every few years, so come back every so often and check for better ones.
9. Start Automated Savings
Since you’ve already established a baseline for your spending, one of the ways you can get to the spending habit is through automation. People often have trouble starting because they forget.
By automating, you save money without even thinking about it.
Every time money is deposited into your account, the bank will automatically transfer the money to another. You’ll have a separate account that’s harder to access, making it ideal for long term saving.
You can set that second account as a high-yield, meaning it’ll gain more interest than a regular account.
Over time, you’ll forget about the account, and when you check, you’ll have accrued several months’ worth of money. Automating the process is the easiest way to do it, as you don’t have to second-guess yourself, and you'll ease into the habit.
10. Take Time with Your Purchases
If you have a habit of spending impulsively, one of the ways to stop that is to take your time when purchasing. Instead of clicking the checkout button right away, leave it for a day and see if you’ll still want the item after some thought.
It will help stop some purchases driven solely by emotion. The reason people have trouble saving is that they don’t control spending.
By taking time and stepping back to think, you’re giving back control to your logic. You can evaluate each purchase better and will gain more satisfaction in the end.
If you’re working on limited time, then maximize the little you have before arriving at any decision. Even a few hours to think can make a difference, helping you make sure the money spent is worth it.
Everything You Do is For Your Future
Every action you take right now will give you a more comfortable future. It may seem too much at times, but you’ll be thankful you’re taking all the steps necessary to improve your financial situation.
Stay motivated by setting goals, and don’t forget to leave money to spend. You don’t have to save everything for the future.
If you’re looking for professional help with saving, consider becoming a member of 121 Financial Credit Union. We offer plans, programs, and accounts that aren’t available with your traditional bank.
You’ll maximize your savings and get loans that have more comfortable terms than usual. Our goal is to help you succeed financially. Contact us today to get started on saving for your future.