How to Save Money -How is 2017 treating your budget? Sometimes the hardest thing about saving money is just getting started. It can be difficult to figure out simple ways to save money and how to use your savings to pursue your financial goals. Here is a guide to help you get back on track saving money in 2017!
Make a budget
Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your incomeâ€”so you can plan your spending and limit overspending. In addition to your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance.
Record your expenses
Â Keep track of all your expensesâ€”that means every coffee, newspaper and snack you buy. Ideally, you can account for every penny. Once you have your data, organize the numbers by categories, such as gas, groceries and mortgage, and total each amount. Consider using your credit card or bank statements to help you with this. If you bank online, you may be able to filter your statements to easily break down your spending.
Plan on saving money
Now that youâ€™ve made a budget, create a savings category within it. Try to put away 10â€“15 percent of your income as savings. If your expenses are so high that you canâ€™t save that much, it might be time to cut back. To do so, identify non-essentials that you can spend less on, such as entertainment and dining out. Weâ€™ve put together ideas for saving money every dayÂ as well as cutting back on your fixed monthly expenses.
Tip: Considering savings a regular expense, similar to groceries, is a great way to reinforce good savings habits.
Choose something to save for
Here are some examples of short- and long-term goals:
Short-term (1â€“3 years)
- Emergency fund (3â€“9 months of living expenses, just in case)
- Down payment for a car
Long-term (4+ years)
- Your childâ€™s education*
- Down payment on a home or a remodeling project
*If youâ€™re saving for retirement or your childâ€™s education, consider putting that money into an investment account such as an IRA or a 529 plan. While investments come with risks and can lose money, they also create the opportunity for compounded returns if you plan for an event far in advance. More details in step No. 6 below.
money is to set a goal. Start by thinking of what you might want to save forâ€”anything from a down payment for a house to a vacationâ€”then figure out how long it might take you to save for it. If you need help figuring out a time frame, try Bank of Americaâ€™s savings goal calculator.
Decide on your priorities
After your expenses and income, your goals are likely to have the biggest impact on how you save money. Be sure to remember long-term goalsâ€”itâ€™s important that planning for retirement doesnâ€™t take a back seat to shorter-term needs. Prioritizing goals can give you a clear idea of where to start saving. For example, if you know youâ€™re going to need to replace your car in the near future, you could start putting money away for one.
Pick the right tools
If youâ€™re saving for short-term goals, consider using these FDIC-insured deposit accounts:
- Regular savings account
- High-yield savings account, which often has a higher interest rate than a regular savings account
- Bank money market savings account, which has a variable interest rate that could increase as your savings grow
- Certificate of deposit (CD), which locks in your money at a specific interest rate for a specific period of time
For long-term goals consider:
- FDIC-insured individual retirement accounts (IRAs), which are tax-efficient savings accounts
- Securities such as stocks or mutual funds. These investment products are available through investment accounts with a broker-dealer. Remember that securities, such as stocks and mutual funds, are not insured by the FDIC, are not deposits or other obligations of a bank and are not guaranteed by a bank, and are subject to investment risks, including the possible loss of principal investment.
Make saving automatic
Almost all banks offer automated transfers between your checking and savings accounts. You can choose when, how much and where to transfer money to, or even split your direct deposit between your checking and savings accounts. Automated transfers are a great way to save money since you donâ€™t have to think about it and it generally reduces the temptation to spend the money instead.
Watch your savings grow
Check your progress every month. Not only will this help you stick to your personal savings plan but it also helps you identify and fix problems quickly. These simple ways to save money may even inspire you to save more and hit your goals faster.