Have you ever been hit with the realization that if you miss a few paychecks, your whole life and your finances can go into disarray? Imagine your credit ruined, your home and car repossessed, and not being able to provide for your family.
Yes, missing just a few paychecks has destroyed many lives, and yours is not immune to the carnage it can wreak — unless you do something differently: save money.
Attaining financial independence is dependent on several factors, and prominent among those factors is the ability to save money. No matter how big or small your income is, if you’re unable to save some for the raining day, it will be nearly impossible for you to attain financial security.
Most people tend to live in a bubble when it comes to their finances. They see other people losing their jobs but never imagine that it will happen to them. They tend to think those paychecks will keep raining in. Well, here’s a surprise for you — they won’t. That’s why you need to put some money aside for the raining day.
According to the Federal Reserve Report on the Economic Well-Being of U.S. Households, many American adults are financially vulnerable. They would have difficulty handling an emergency expense as small as $400. Of the people surveyed, 27% will have to borrow or sell something to raise $400, and 12% will have no means of getting the money.
If you fall anywhere within the statistics above, or if you’d have to use your credit card to cover a $400 emergency expense, then this article is for you. Regardless of how small your income is, putting money aside for the rainy day is possible, and here’s how.
Start With A Goal – How Much Do You Want To Save?
Having an established goal is very crucial if you want to save money on a tight budget successfully. Think of it as a guiding light — a lighthouse, if you will. It will help you to know and measure your progress.
Ask yourself the question, “how much do I want to save? Is it $200, $1000, or $5000”? Whatever the target amount is, it is your goal. Now you have to do everything to achieve that goal.
Set A Specific Time Frame To Achieve Your Savings Goal
Goals need to be bound by specific time frames. Do you want to save $1000 within six months, one year, or two years?
Setting your goals and having a specified time frame for achieving them is a good strategy because it adds a sense of urgency to the process.
If you want to save $1,000, for instance, but don’t have a deadline for doing so, likely, you wouldn’t achieve your goal because there’s no motivation or sense of urgency attached to it.
Now that you understand the importance of having a goal and setting a timeframe to achieve it, now let’s go and save some money.
1. Save Automatically
Saving money is not easy, especially when you don’t have enough of it. However, to make the process painless and straightforward, you should set up your bank account in a way that money gets automatically transferred from your checking account into your savings account.
Once you set the system up –a process that may take less than five minutes — your bank will handle everything else automatically.
If you plan on saving $50 or $200 every paycheck, your bank will transfer that amount from your checking account to your savings account.
Tip for success: To succeed with this method, let your checking account and your savings account be with different banks. For example, if your checking account is with Bank of America, let your savings account be with Ally Bank or American Express Savings Bank. This way, you wouldn’t have easy access to squander the money in your savings account.
There are other tips like putting a restriction on withdrawals from your savings account until a specific date or until the money reaches a certain amount.
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2. Develop A Budget
One way to save money is to control your spending. A budget is a useful tool for controlling spending. A budget lets you know how much to allot for a particular expense category, and if you are going by your budget, you will constrain your expenses to remain within the confines of your budget.
If you can’t develop a budget spreadsheet yourself, there are practical budgeting tools and Softwares out there that you can use. Some of the best personal budgeting tools are:
3. Use A Shopping List
Using a shopping list to shop is an excellent strategy for controlling costs and saving money.
Most people who go grocery shopping without a shopping list end up buying other things they didn’t plan on buying.
When I go grocery shopping without a list, I almost always end up spending over 1.5 times the amount I paid when I use a list.
Tips For Succeeding: Have a master list of things you always get when you go shopping. Place that list on the refrigerator door, and also snap a picture of it. You can use the image as a guide whenever you go shopping.
4. Buy Generic Or Store Brands
Sometimes the difference in quality between the products is non-existent. For example, the difference in bourbon from one brand to another may be minuscule. However, customers pay a premium for one label over the other because manufacturers are good at marketing.
Store and generic brands can be just as good for sometimes half the price of the premium brands. If you are serious about saving money, consider buying less expensive store and generic brands.
5. Avoid Using Appliances During Peak Hours
Did you know that there are peak hours for electricity use, and utility companies charge more during those peak hours?
PG&E, one of the largest utility companies in the United States, has a “Time-Of-Use Rate Plan.” What this means is that they charge their customers based on the time of day they use their appliances. PG&E’s peak time is 4 pm – 9 pm.
The rate during the peak time for PG&E is almost twice as much as the rate during off-peak time. What this means is that you should reduce the use of your electrical and electronic devices during peak time.
If you live in other parts of the country, call your utility company or visit their website to find out what their peak time is. Doing this will save you a lot of money on utility bills.
6. Buy In Bulk
Buying in bulk is a good strategy for saving money. Brands like Costco and Sam’s Club offer excellent value for money when you buy in bulk.
However, buying in bulk shouldn’t be limited to big-name discount outlets. You can buy in bulk at your local grocery store as well. Most stores sell packs of items for much less than they sell individual items. It pays to do some research before you make your purchase.
7. Ask For Deals And Promotions
“Do you have any deals or promotions going on right now?” That’s a simple question that could save you a ton of money.
Many times, stores have promotions that are unpublicized, and if you ask, you may get to know about those promotions.
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8. Shop Around Before You Buy
Comparing prices is one of the oldest shopping strategies. You will be surprised to know that something sold for $100 in one location may be sold for $150 in the next.
I remember buying a family-size pack of Oreos for $2.78 in one store and then seeing the same item sold for $3.98 in another store. That’s more than a 30% price increase.
It is a huge deal to save 30% on your grocery bill every time you go shopping.
9. Audit Your Recurring Monthly Payments
Do you have subscriptions that you don’t use? Cutting those subscriptions will be a great way to save money. Are there digital magazines, music, videos, and other subscriptions you’re still holding? Consider canceling those subscriptions to save money.
10. Scrutinize All Your Bills And Ask For Deals, Discounts Or Promotions
Get a list of all your bills and see if you can negotiate deals and discounts from your creditors.
I remember once receiving a very high AT&T bill. I immediately called customer service and complained about the bill — they were charging me for data overages and other things.
The customer services lady generously offered to cancel all those charges. I ended up saving almost $120. Now imagine if I just went ahead and paid those bills. I would have lost $120 that I could be spending on other things.
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Bottom Line
Saving money has to be a conscious choice. It is a deliberate decision to alter the way you live now so that you can live better in the future. Anybody can be a saver, no matter the income. It all depends on your resolve and determination.
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