Saving money, or the habit of saving money may seem like a tricky thing to do when you’re more often than not caught up in the day-to-day of simply paying bills and working to make ends meet. But with some tips and tricks, you can learn how to save money each month.
Having money saved provides you the ability to have more flexibility in your life with everything ranging from vacations, to education, to health care, starting a new business, or investing in your future. Read on to learn about creative ways to save money each month and get in front of the grind of the day-to-day struggle of debt.
Investing vs. Saving Money
What does it mean to invest money versus saving it? Both of these key things have a place in your financial life, but they serve very different roles. How you handle each can have substantial implications for your financial success, your personal stress levels, and how much money you ultimately end up having in your bank account.
When you begin saving money you are taking out a specific amount of money whether it be daily, weekly, or monthly and putting it aside with the sole purpose of not spending it. However, when you decide to invest, you are actively taking a portion of the money and investing it into another business, company, stock, project, etc.
There can be a return on each of these, ranging from small and conservative if you save your money in a savings account or larger if you invest your money into a growing business or stock.
Getting educated on what is best for you will help you make solid decisions about where your money is going in the long and short term. But take the time to consider doing both when it makes sense for you.
Pay Yourself First
A great way to save money each month is by paying yourself first. This device has been proven over and over again to cause people to change their behavior around saving. To pay yourself first simply means before you pay your bills, buy your groceries, or do anything else, set aside a dedicated portion of your income to saving. Put the money in a 401 (k), a savings account, or your Roth IRA.
Setting up automatic savings every month is another way to easily, effectively, and creatively save money each month. Every pay period, you have your employer deduct a set amount from your paycheck and then have it transferred to a savings account or retirement account. You can set up the same system with your bank or credit union as well by having them transfer it to a savings or investment account.
There are numerous apps you can also get now that can round up every purchase you make and take those pennies and invest them for you as well. So without even thinking about it, the extra twenty cents you would have not noticed from that coffee purchase can go towards growing your retirement fund.
Pay Off Your Credit Card Every Month
Every month, you pay for groceries, car insurance, gasoline, and a slew of other daily and monthly necessities to get by in this life. A great way to utilize this debt that must be paid month-in and month-out is to pay off the balances of any existing credit cards and switch to cards that generate points you can redeem for cashback or rewards.
For instance, if your household expenses are averaging around $385 per pay period, or $10,000 a year, you could switch to a credit card that offered between 3% and 5% cashback, which would put up to $500 back in your wallet each year. Further, if you were to add that to your 401 (k) for example, which can earn up to 10% a year, with the average rate of return in thirty years that could add up to nearly $82,250 in extra savings.
Make Short Term And Long Term Goals
Sometimes thinking about how to save money each month can feel daunting but if you break your goals down into long term and short term, it can help to alleviate a bit of the stress.
With short term savings goals, try to make a goal of setting aside $20 a week or month rather than an amount that seems too overwhelming and costly. Keeping consistent with that savings plan will help you over the long haul as well.
For long term savings, start to think about saving for retirement as early as possible. Through the beauty of compound interest, which is earning interest over many years, you have the ability to build wealth. Because time is an asset, start saving for the long haul as soon as you can. That said, it’s never too late to start saving for retirement!
Dive in and start saving, as it’s never too early or too late to plan for your future! Learn more about ways to save at Cash Factory USA today!