8
Simple Ways to Save Money
Tips on saving and investing to pursue your financial goals
Sometimes the hardest thing about saving money is just getting
started. It can be difficult to figure out simple ways to save money and how to
use your savings to pursue your financial goals. This step-by-step guide can
help you develop a realistic savings plan.
1. Record your expenses
The first step in saving money is to know how much you’re
spending. For one month, keep a record of everything you spend. That means
every coffee, every newspaper and every snack you purchase for the entire
month. Once you have your data, organize these numbers by category—for example:
gas, groceries, mortgage and so on—and get the total amount for each.
2. Make a budget
Now that you have a good idea of what you spend in a month, you
can build a budget to plan your spending, limit over-spending and make sure
that you put money away in an emergency savings fund. Remember to include
expenses that happen regularly, but not every month, like car maintenance
check-ups. Find more information on creating a budget.
3. Plan on saving money
Taking into consideration your monthly expenses and earnings,
create a savings category within your budget and try to make it at least 10-15
percent of your net income. If your expenses won't let you save that much, it
might be time to cut back. Look for non-essentials
that you can spend less on—for example: entertainment and dining out—before
thinking about saving money on essentials such as your vehicle or home. You can
check in site that offers coupon code when buy item online.
4. Set savings goals
Setting savings goals makes it much easier to get started. Begin
by deciding how long it will take to reach each goal. Some short-term goals
(which can usually take 1-3 years) include:
Starting an emergency fund to cover 6 months
to a year of living expenses (in case of job loss or other emergencies)
Saving money for a vacation
Saving to buy a new car
Saving to pay taxes (if they are not already deducted by your
employer)
Long-term savings goals are often several years or even decades
away and can include:
Saving
for retirement
Putting money away for your child's college education
Saving for a down payment on a house or to remodel your current
home
5. Decide on your priorities
Different people have different priorities when it comes to
saving money, so it makes sense to decide which savings goals are most
important to you. Part of this process is deciding how long you can wait to
save up for a goal and how much you want to put away each month to help you
reach it. As you do this for all your goals, order them by priority and set
money aside accordingly in your monthly budget. Remember that setting
priorities means making choices. If you want to focus on saving for retirement,
some other goals might have to take a back seat while you make sure you're
hitting your top targets.
6. Different savings and investment strategies for different
goals
If you're saving for short-term goals, consider using these FDIC-insured
deposits accounts:
A regular savings
account, which is easily accessible
A high-yield savings account, which often has a higher interest
rate than a standard savings account
A bank money
market savings account, which has a variable interest rate that could
increase as your savings grow
A CD (certificate
of deposit), which locks in your money at a specific interest rate for a
specific period of time
For long-term goals consider:
FDIC-insured
IRAs, which are built for purposes such as retirement savings. If
you’re not sure how much money you should set aside for retirement, give the
Merrill Edge retirement
calculator a try.
Securities, like stocks and mutual funds. These
investment products are available through investment accounts with a
broker-dealer (e.g. Merrill Edge). Remember that securities, such as stocks and
mutual funds, are not insured by the FDIC, are not deposits or other
obligations of a bank and are not guaranteed by a bank, and are subject to
investment risks including the possible loss of principal invested
7. Make saving money easier with automatic transfers
Automatic transfers to your savings account can make saving
money much easier. By moving money out of your checking account, you'll be less
likely to spend money you wanted to use for savings. There are many options for
setting up transfers. You choose how often you want to transfer money and which
accounts you want to use for the transfers. You can even split your direct deposit
between your checking and savings accounts to contribute to your savings with
each paycheck. Thinking of saving as a regular expense is a great way to keep
on target with your savings goals.
8. Watch your savings grow
Check your progress every month. Not only will this help you
stick to your personal savings plan, but it also helps you identify and fix
problems quickly. With these simple ways to save money, it may even inspire you
to save more and hit your goals faster.
