The stats don’t lie. Many of us have trouble saving. Approximately 37 percent of people would not be able to cover an unexpected $400 expense without either selling something or borrowing money.While that number is actually an improvement from 50 percent of adults in 2013, it still shows that it's important to save where we can. The problem is that spending is easier (and often more gratifying in the short term) than having money sitting on the sidelines. The best way to save more? Trick yourself. Here are five tricks you can employ to help you save more of your money.
Trick #1: Automate Your Savings
One of the best ways to save your money is to forget it’s even there. Take willpower out of the picture by setting up an automatic transfer from your checking account to wherever - savings, a retirement account, etc. Every month after your paycheck is deposited, your bank or brokerage can automatically transfer over a lump sum of your choosing without any interaction needed. After a while, you may completely forget that you’re even saving money, meaning there’s much less temptation to spend it instead.
Trick #2: Name Your Savings Accounts
Don’t underestimate the power of giving your money a name or meaning. Setting up subaccounts for specific savings goals can be effective, especially if you rename each account to the goal you’re saving for. Think about it, which would be harder to take money out of? Savings or 10 Year Anniversary Trip? Directly connecting your savings with your goals can help deter you from wanting to spend your money.
Trick #3: Find a Personal Budget Software App
You likely don’t have the time (or desire) to sit down and track your spending manually. But with today there are plenty of personal budgeting apps that can sync your accounts, track your spending in real-time, and automatically develop a budget to help you save. Giving a visual overview of your spending and saving habits can be a real eyeopener, making it easier to understand how much you’re really spending and where you have opportunities to save. If you happen to be an Escient Financial client you have access to budgeting tools built right into the financial planning software on your computer via the web or via a mobile app.
Trick #4: Divert Payments
An important part of building up your savings may include canceling unused memberships or subscriptions, cutting the cable cord, or paying off loans like car payments, student debt, and more. However, if you’re not diverting that now “unclaimed” portion of your paycheck into savings, you’re just as likely to spend it elsewhere. Find out just how much you were previously spending on these payments or subscriptions, and then set up automatic payments to a savings or retirement account, or stick that money in an envelope to build-up your cash emergency fund.
Trick #5: Don’t Spend Your Pay Raise
This one can definitely feel hard to do, but it can be another great “out of sight, out of mind” trick to use if you’re able to afford it. Say you’re living on what you’re already making, but receive a bump in your salary of 10 percent. Instead of increasing your monthly spending because you can, consider diverting a portion of it into a savings or retirement account. For example, you could incorporate a certain amount, say five percent of the 10 percent raise, into building up your monthly budget, but automatically roll over the other five percent into a separate savings account. This allows you to enjoy a modest boost in both your monthly spending and your savings.
(Bonus) Trick #6: Don’t Spend Your Tax Refund
This one may also seem difficult to do, especially if you happened to receive a fairly large tax refund. It may be tempting to use that tax refund for a larger purchase, especially if it's something you've been waiting for. However, that tax refund could turn into greater rewards if saved or invested. Of course, another option would be to spend some of the tax refund, and it could be very beneficial to pay down any debts, but try to save or invest as much of it as possible.
Saving money can feel like such an impossible task to do, especially when the temptation to spend has gotten so high. Using these tips and tricks, you and your family can work toward automating your savings, developing healthy money habits and seeing your money grow. Escient Financial can help you find the best ways to spend less, save more, and find the a path to achieving your goals with a comprehensive financial plan. Go ahead and...
FAQs
Canceling unnecessary subscriptions and automating your savings are a couple of simple ways to save money quickly. Switching banks, opening a short-term CD, and signing up for rewards programs can also help you save money. Making a budget and eliminating a spending habit each day can help lead to long-term savings.
How can I force myself to save money? ›
Canceling unnecessary subscriptions and automating your savings are a couple of simple ways to save money quickly. Switching banks, opening a short-term CD, and signing up for rewards programs can also help you save money. Making a budget and eliminating a spending habit each day can help lead to long-term savings.
What is the 50 30 20 rule? ›
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
What is the 30 day rule? ›
The premise of the 30-day savings rule is straightforward: When faced with the temptation of an impulse purchase, wait 30 days before committing to the buy. During this time, take the opportunity to evaluate the necessity and impact of the purchase on your overall financial goals.
How can I trick myself into spending less money? ›
How to Save Money: 23 Tips
- Make a budget.
- Say goodbye to debt.
- Set a savings goal.
- Save money automatically.
- Buy generic.
- Meal plan.
- Cancel some subscriptions and memberships.
- Adjust your tax withholdings.
To reach $10,000 in one year, you'll need to save $833.33 each month. To break it down even further, you'll need to save $192.31 each week or $27.40 every day. These smaller chunks are much more realistic and simple to comprehend, making it easier to track your progress.
How to save 10 grand in 6 months? ›
Here's how I did it & how you can do it, too.
- Set goals & practice visualization. ...
- Have an abundance mindset. ...
- Stop lying to yourself & making excuses. ...
- Cut out the excess. ...
- Make automatic deposits. ...
- Use Mint. ...
- Invest in long-term happiness. ...
- Use extra money as extra savings, not extra spending.
Are you approaching 30? How much money do you have saved? According to CNN Money, someone between the ages of 25 and 30, who makes around $40,000 a year, should have at least $4,000 saved.
How to budget $5,000 a month? ›
Consider an individual who takes home $5,000 a month. Applying the 50/30/20 rule would give them a monthly budget of: 50% for mandatory expenses = $2,500. 20% to savings and debt repayment = $1,000.
How much should I save per month? ›
How much should you save each month? For many people, the 50/30/20 rule is a great way to split up monthly income. This budgeting rule states that you should allocate 50 percent of your monthly income for essentials (such as housing, groceries and gas), 30 percent for wants and 20 percent for savings.
A wash sale is a transaction in which an investor sells or trades a security at a loss and purchases "a substantially similar one" 30 days before or 30 days after the sale.1 This is a rule enacted by the Internal Revenue Service (IRS) to prevent investors from using capital losses to their advantage at tax time.
What is a wash sale? ›
A wash sale occurs when you sell or trade securities at a loss and within 30 days before or after the sale you: Buy substantially identical securities, Acquire substantially identical securities in a fully taxable trade, or. Acquire a contract or option to buy substantially identical securities.
What is the wash rule for the IRS? ›
Q: How does the wash sale rule work? If you sell a security at a loss and buy the same or a substantially identical security within 30 calendar days before or after the sale, you won't be able to take a loss for that security on your current-year tax return.
How do I stop living paycheck to paycheck? ›
How to Stop Living Paycheck to Paycheck
- Get on a budget.
- Take care of your Four Walls first.
- Cut extra expenses.
- Start an emergency fund.
- Ditch debt.
- Increase your income.
- Live below your means.
- Save up for big purchases.
100 Envelope Challenge
To begin, gather 100 envelopes and sequentially number them $1 through $100. On day one, you'll place $1 in envelope one. On day two, you'll add $2 to envelope two, and so on. Place each envelope in a safe place, and by the end of the challenge, you'll have saved $5,050.
How do I start sinking funds? ›
To set up a sinking fund, you'll first need to identify which specific expense or goal you want to save for. Estimate how much you'll need to save and how long you need to save up for it. Then calculate how much you'll need to save each month to reach your goal.
How to save $1,000 fast? ›
Dave Ramsey's 9 Ways To Save Your First $1,000 Fast
- Cancel Subscriptions. ...
- Bring Your Own Lunch. ...
- Avoid Coffee Out. ...
- Re-Sell Old Items. ...
- Shop at Cheaper Grocery Stores With Rewards Programs. ...
- Buy Generic. ...
- Join a Carpool. ...
- Pick Up a Side Hustle.
Financial illiteracy is one of the biggest reasons people have difficulty saving or investing money. Many people don't understand how to save or budget their money, which causes them to spend more than they earn. Ignorance can also lead them to make bad financial decisions that can further hurt their ability to save.
Why do I never save money? ›
If you don't have a goal in mind of how much you want to save or what you want to use the money for it's easy to let other things take priority. Take some time to think about what your goals are and what you're willing to sacrifice to achieve them.
