Many people associate saving money with not being able to have fun. But this isn’t necessarily the case. Limiting the amount you spend on unnecessary things will help you save more money. But there are other ways to build up your savings while still occasionally spending money on entertainment and food! In this guide, we will show you how to budget your money to support your savings, maximize your work time, invest, and more.
Budgeting may not seem like a way to save money fast, but it’s actually one of the most effective strategies. In fact, one of the most common reasons people have trouble saving is they don’t budget. Budgeting is the best way to keep track of what you are spending each day because It gives every dollar a name and tells it exactly where to go and when.
If you don’t budget, your money can go wherever the wind blows, and it will be easier to lose track of what you made and where you spent it. However, when you budget, your money stays in your control and does whatever you tell it to!
But how should you budget, and what should you budget for? Here are a few simple tips for starting a basic budget!
Identify your goals
The first step to budgeting and saving money fast is identifying a specific goal for how much you want to save! Maybe you want to save for an emergency fund of $1,000. Maybe you want to save enough to pay off your college debt. Maybe you want to save for a new vehicle or home purchase. Or maybe you just want to have an adequate savings of 3 to 6 months of your salary so you can be financially secure.
No matter the reason for your saving, it’s important to identify your goal so you can plan accordingly. This also helps you stay motivated. When you name your goal, you can look forward to achieving it and are more likely to stay on track with saving than if you saved without a specific goal in mind.
List your necessary monthly expenses
The second step to creating a budget is listing out your necessary expenses for each month. Necessary expenses are different for everyone, but here are some common needs for most people.
Shelter is a need for everyone. As an expense, this can look like mortgage payment, rent payment, or other bills like electricity and water. Food is also a necessary expense for everyone as well as clothing and transportation.
Another necessary expense that may not be thought of as necessary is an emergency fund. Your emergency fund should have at least $1,000 in it. The logic behind it is simple: If an emergency happens, it’s always best to be prepared!
Other necessary expenses depend on your circumstances. For instance, if you own a car and rely on it to go to and from work or other places, car insurance is a necessary expense. If you work from your home and rely on a computer, the internet would be a necessary expense.
Luckily, even with these necessary expenses, there are ways to save money and lower these costs. Keep reading to find out how!
If you’re still unsure which of your expenses are necessary, here’s a guide:
List everything you pay for per month. Dig out receipts, look at your bank account statements, and find all of your monthly bills.
Then go through and cross off anything on the list that you don’t consider a need.
Go through the list again and cross off everything that you could survive without if you absolutely had to.
The things remaining on your list are your necessary expenses!
A good rule of thumb to follow is the 50/30/20 budget rule. This divides your monthly income into categories. According to this rule, 50% of your income goes to your necessary expenses!
Factor in variable expenses
Depending on how quickly you want to save money, your budget may have more or less wiggle room when it comes to things you want instead of things you need. These could also be known as your variable expenses.
If you want to save money as fast as possible, you should cut out as much unnecessary spending as you can. These expenses may include dining out, stopping for a cup of coffee, entertainment like Netflix, cable, or going to a movie with friends.
Cutting out the things you don’t need to survive and live each day is a great way to help you save money fast. In fact, many Americans don’t realize how much money they spend each month on things they don’t need or even use that often.
According to the 50/30/20 rule, 30% of your income can go to your variable expenses, or the things you want!
Save the rest
The last step to a budget is easy! Save the rest. After you have set your budgeting goal, recorded which expenses you need and which you don’t, you can do the math and save all the money left over! Especially if you stop all unnecessary spending (yes, this means making coffee at home), you will be surprised at how quickly you can save.
Your savings correlates with the last aspect of the 50/30/20 rule. This means that 20% of everything you make should go directly into your savings.
Look for ways to lower your bills
Another great way to save money fast is to cut down on your bill payments. Many people aren’t aware of how to cut down on some of their necessary expenses, but they are more accessible than you think. Even $5 saved here and there adds up fast!
Your phone bill
One of the best ways to lower your phone bill is to switch to a prepaid cell phone plan. While the average cell phone plan can cost up to $100 per month, a prepaid plan can be as low as $15! The term prepaid simply means that you pay at the beginning of the month rather than at the end of the billing period.
Prepaid plans have lower taxes, no contract so you can switch anytime, and most offer unlimited talk and text.
Your car insurance
If you own and drive a car, insuring it is important and required (unless you live in New Hampshire). Luckily, there are ways to cut down on your car insurance payments that you may be unaware of. Here are a few:
Shop, shop, shop!
One of the best ways to find the lowest car insurance is simply to shop. Exploring all your options helps you get a better idea of the coverage available for your needs and budget and helps you find the lowest option.
Look for discounts
While you’re shopping, don’t hesitate to ask for discounts. Many companies don’t advertise which discounts they offer, so always ask about any discounts. For instance, if you have multiple drivers or vehicles, teenage drivers, a good driving record, or even good credit score, you may qualify for discounts and lower rates!
Raise your deductibles
Another great way to lower your monthly car insurance payment is to raise your deductible. A deductible is what you pay out of pocket if you get into an auto accident. This amount is usually either $500 or $1,000.
Here’s how it works! If you have a $500 deductible, your premium costs will be higher per month, but you will only pay $500 if you get into an accident. If you have a $1,000 deductible, your premium costs will be lower per month because your out-of-pocket costs will be $1,000 if you get into an accident.
Before adjusting your deductibles, make sure the savings are worth it! Talk to your insurance provider about whether adjusting your deductible is a good idea for you.
You can save money fast by cutting down on unnecessary expenses and lowering your monthly bills. However, once you make a budget and dedicate 50% of your income to paying your necessary bills, you can dedicate any extra income to directly fund your savings account.
Here are some easy ways to make extra income!
- Sell things you aren’t using. Consider selling anything you haven’t used or worn in the past year or two. This can put a couple extra hundred dollars in your savings account and help you declutter.
- Look for side hustles. Put an ad near your street to be a dog walker, start babysitting for someone you know, or pick up a part-time or weekend job. In addition, services like Uber, Lyft, and GrubHub are easy jobs you can do on your own time. Any extra income can help increase your savings fast.
- Start a blog. Starting a blog is easier than you think, and before you know it, you could start making consistent extra income to help you rack up your savings!
To sum up
Saving money may seem out of reach, but with these tips and tricks, achieving your goal is closer than you might think. From budgeting, to examining your monthly bills, to picking up extra jobs, these money-saving tips and tricks will help you lower costs and save money faster than ever.