Are you planning to buy a house, car or a big expense coming up around the corner? A study by GoBankingRates in 2017 found that most people in their early and mid-20s had less than $1,000 in their savings accounts and about half have no savings whatsoever. The hardest part about saving money is getting started – luckily, we are here to help! Here are 5 tips on how to save money like a boss.
Bookkeeping and recording your expenses is a critical skill that can bring you much closer to the down payment on a house or any other big purchase you have in store. The key to saving money like a boss is knowing where your money is going. Record every expense: this means even that Starbucks you’re getting on the way to work. This can help you figure out the ‘holes’ in your budget and find opportunities to cut your expenses and save money.
The easiest way to accumulate a small nest-egg? Leave it to technology. Start by setting up a savings account (which you should already have) and automate savings deposits from your paycheck or your checking account every month. Figure out the amount based on your goal. If you’re planning to buy a house, the rule of thumb, for instance, is spending no more than 25% of your monthly take-home pay on the mortgage payment.
If you’re an adult, chances are you’re getting more money than you do presents. The moment you stumble upon some unexpected cash from Grandma for Christmas put it immediately into your savings account. Not only does this bring you closer to your goal but it also ensures your money won’t just get ‘flushed out the drain’ when you’re tempted to make a random, unnecessary purchase.
Do you happen to put money into your savings account, only to withdraw them a week later because you just ‘need’ to buy something urgent? When you keep a savings and a checking account in the same bank, you make your sweet savings all the more accessible, which could detract you from your savings goal. A neat trick is to set up a savings account in a different financial institution. Bonus points if you take the time to research and find the one with the highest interest rate.
Saving money isn’t fun. If you have loads of disposable income, live in a cheaper area or don’t go out all that much, saving money can be a bit easier. However, the key to amassing that nest-egg is often figuring out how to spend less, i.e. live frugally. You would be surprised how much you can save if you forsake ‘luxuries’ like take-out, dining out or grabbing your coffee on the go instead of making it at home. This is where having a set-up budget plays in handy: figure out what your unnecessary expenses are (beyond things such as rent, bills, gas, and groceries) and cut as much as you can. We promise the sacrifice will be worth it.