How to Save Money – 5 Steps to help you plan
Times are tough out there. No matter if you are an individual or a business, finding new and creative ways to save has become a priority in many of our lives. When it comes to spending, we’ve changed our usual habits and look for the best deals. After all, we know that saving money can make a real difference in ‘the bottom line’.
So why is it so hard to do?
Studies show if you write something down, you are more likely to follow through. In addition, if you have a plan, you are more likely to stay focused and reach your goals.
Here are five steps to help you develop a plan on how to save money.
1. Set savings goals.
Seems obvious right? Yet, so many savers fail to do it. Start by developing a budget so you know how much money you have, Keep track of your expenses to be sure you know where your money goes. The longer the period of time you can look at the better. Once you have a handle on your income and your expenses, you can set your sights on where you want to be. Your goals will vary depending on your specific circumstances. Make sure they are realistic, and don’t put your personal, family or business security in jeopardy.
2. Cut back on expenses.
We’re not talking about skimping on the basics- food, shelter and clothing. We are talking about choices. For example; name brand or generics, boutique or thrift store, catalogue or resale shop. You get the idea. Savers do what they have to in order to try to meet your savings goals.
Before you spend anything, you need to ask yourself these three questions:
– Do I want or do I need that?
– Can I get it for less someplace else?
– How does making this purchase impact my savings goals?
Just think, that $5.00 gourmet coffee 5 days a week can save you $1,300 a year!
I never said it would be easy…
3. Tackle debt.
Once you have found the ways to cut back that make sense for your situation, you can target the next savings killer- debt. No matter if it is credit cards, student or business loans, most people have some form of debt. Make sure in your plan you are redirecting a portion of your savings towards the principal of these debts so you can “kill” them, one by one. One way to approach this is to start with the smallest debt that you can pay off the soonest, and then take that momentum (as well as your no-longer necessary monthly payment) and carry it forward towards the next debt you need to “kill”.
4. Get the right savings account.
At this stage in your plan, you should have found a way to start realizing some monetary savings. You are putting some of that savings towards paying off debt. Make sure you find the best place to keep the rest of it, and I’m not talking about your mattress! Take the time to do the research to be certain that you’ve found the best savings account for your needs. Today, this is easier than ever. There are many sites out there that will compare savings accounts online. Make sure you have the best interest rate, best accessibility, and all of the features that are right for you.
5. Be consistent.
What is the #1 reason for failure for any saver? You’ve spent all of the hard work setting your goal, and enacting your plan, and now you want to back off a bit. Maybe just until after the holidays, and then you’ll start again. If that sounds like the road to ruin for a diet or gym membership, it can also sell disaster for a savings plan. Consistency is key. You need to make savings a lifestyle in order to reap the real benefits.
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