How To Save More Money

Saving money is important, whether the economy is booming or receding. With the cost of gas, food and utilities rising, it may be overwhelming to try to save any money at all. Still, if you follow these steps, you will be on your way to saving more money.

1. Review your finances. The first step to saving money is to know how much you have and where you’ve been spending it. Start with the last two months. Divide everything into piles and make lists of income, regular bills and then purchases. Include any credit card purchases for gas, food, entertainment and clothing. These are part of your monthly expenses even if you charge them.
2. Cut out expenses you don’t benefit from. Now that you know what you are spending, you should see trends. If you find you spend $3 for coffee and $10 for lunch every workday, that results in $260 per month of expenses. Make coffee at home and bring your lunch so you save half that. If you buy books but then never get around to reading them, head to your local library instead.
3. Create a budget. A budget is your plan for how you spend your money. Make sure that saving is listed. If it isn’t part of your planning, you won’t do it.
4. Put the budget aside for a week, then look at it again. When most of us create a budget, we find that we spend more than we make. On your second look, you need to be honest with yourself and cut more expenses. Sometimes this means cutting out cable, your teenager’s cell phone, making a carpooling arrangement or eating at home instead of dining out. Cut and cut ruthlessly.
5. Make your savings payment to yourself each payday. If you have direct deposit, most companies allow you to split it into more than one account. Have the designated amount sent directly to your savings account so it never becomes available for you to spend.
6. Set a goal for your spending. It may be difficult to save money for the future with no plan or motivation. Are you saving for your kids, for retirement or for that family vacation? Make a choice and then write it down. That goal will motivate you when you want to give up.
7. Start using cash instead of credit. If credit is your best friend, this may be the most difficult change for you to make. The most effective way to get a handle on your spending is to watch your cash disappear out of your wallet. Follow your budget and give yourself cash at the beginning of each month to pay anything that you don’t have to pay through the mail. This means groceries, haircut, bookstore, clothing and entertainment--everything you normally just swipe your debit card for and then forget about. Remember when the cash is gone, you are done. You cannot spend anything else until the next month.
8. Plan for setbacks, then keep trying. Getting a handle on your finances takes work. There will be setbacks and emergencies that require the money you saved. You may have splurges you can’t resist. Balance that spending splurge with cutting spending in another area for that month. And when emergencies arise, remember that they are the reason you started to save.

Saving money is hard. We are bombarded each day with advertisements for things we think we (or our kids) cannot live without. In reality what we cannot live without is a sense of security. Saving money for our future helps create that security.