Americans say they want to save more. For example, a recent Gallup poll found that the majority put the priority on saving versus spending. However, according to Statistic Brain, the average American family savings account has only a balance of $3,800, and a mere 38 percent of households have an emergency fund to count on.
Why the track record for savings is so dismal in America is that the habit of spending, developed when the economy was stable and growing, is deeply embedded. The good news is that, yes, it is difficult but not impossible to change that habit. Here are 3 proven tips on ways to save money.
Pay Yourself First
There is a popular personal finance adage of “Pay yourself first.” That means that you structure your financial affairs to ensure regular savings for your own benefit. That is and remains a must-do before any other bills are paid. Those savings on your behalf may be small, at least initially. Also, they may be diverse.
Every month, for example, you arrange with your bank to transfer $45 from your salary, which your employer direct deposits into your checking account to savings or a money market account. Also, you open an Individual Retirement Account (IRA). The bank transfers $50 a month into that. At work, you sign up to contribute 3 percent of your gross into the employer-sponsored retirement fund.
Over time, the amounts regularly saved will probably increase. Also, other kinds of savings programs could be established.
Make Savings a Fun Game
If you follow the blogs comparing prices of milk at grocery stores, swapping coupons, and tracking loyalty/rewards programs, immediately you pick up on the passion. These “Frugals” are having fun and loving the tips on ways to save money. Often their whole households get involved since the satisfaction of spending less is contagious.
Spending less starts with a written budget to which everyone in the household agrees. It should not be too stringent, allowing funds for discretionary treats such as date nights and lattes. The purpose is to create awareness of where all that money is going. Based on that fresh insight, major strategies for savings can be created.
For example, if more than half of the income is for fixed expenses related to home ownership, the options could be a less expensive house, renting, or even relocating to where housing costs peanuts. As those options become obvious and decisive action is taken, the money saved could become the biggest accomplishment of your life.
Bring in More Money, Saving It All
For those who become habitual savers, bringing in more money ups the game. Those amounts can be small, as in participating in the neighborhood yard sale. Or renting out half the garage. However, they could also be large as in launching a family Internet business. The focus could be selling healthy dog and cat treats. No need for anyone to curtail their current work or school schedule since the heavy lifting is done by those on the fulfillment end. Essentially the profit comes from the idea, supply chain management, and attractiveness of the website.
The trick here is not to spend a penny of the incremental income on increasing one’s personal pleasures. This money could be the nest egg for taking care of emergencies, college tuition, and retirement.
These 3 tips on ways to save money are just the beginning of your journey to financial independence. As you travel the amazing path of frugality, you will spot many more opportunities to save and to make more money, which converts immediately into even more savings.