What’s more fun than budgeting? Saving of course! In all seriousness if you want to have your ducks in a row by your desired travel date, it’s a very necessary pain in the neck. Read on to find out how I’m figuratively finding money under my couch cushions to put towards my savings goals.
Where did that $20 go?
That’s the million dollar question right? Ever feel like once you break your $20 bill the remainder just vanishes into thin air? It happens to the best of us, but one of the first keys of saving money is knowing where your money is going. If you don’t have a grasp on where and how you spend your money, you won’t be able to identify areas where you can cut back. I’ve kept track of my personal budget and monthly expenses for over 10 years so I know where my money goes. I’m also able to look at trends in my spending habits over time as well as make monthly and annual projections based on any changes in spending that I’m planning. Think big purchases like vacations, new furniture, holiday shopping, down payment for a new house,etc. There’s power in knowing where you are going. If you have not paid attention to your spending happens in the past, and you have no clue where your money goes, I challenge you to start tracking your spending this month. You may be surprised where your money goes.
What do you want more?
I’ll try not to sound too much like your parents, but life really is all about options and the selections you make. Do you drink fancy, expensive barista prepared coffee everyday or eat out for lunch everyday? If so, how much do you spend on those items? $50, $75, $100 or more per week? Those purchases could cost you $400 or more per month! What else could you do with that money and what do you want more? Would you rather have the convenience of having someone else prepare your coffee and food for you or do those things yourself so you can sock that money away for something else you want like an epic vacation or down payment for a house. Be honest with yourself about what you really want because your spending habits will tell on you if your actions don’t match what you say you want. The proof will be staring you in the face in black and white measured in dollars and cents in your bank account.
Cutting Back
Now that you know where your money is going, and you have identified an endeavor worth saving for, you can start taking a look at where you can cut excess spending by shifting how your money is allocated. This will likely be difficult so prepare yourself mentally and start the process now. The more time you have between now and your goal, the more runway you will have to save. If you have to get really lean on your spending to make your goal, comfort yourself by knowning this ultra savings spree is only temporary.
Areas of opportunity
The list of items below are only suggestions to get your creative juices flowing. Pick and choose based on what’s realistic for you.
Earn more. Save more. Keep spending static.
When you get a pay increase, pretend like you didn’t. Keep your spending at the pre-raise amount and immediately but your raise money in savings. If it comes in a recurring paycheck, create auto savings drafts that go straight to your savings account. If the extra money comes as a one time bonus, put the lump sum in savings. Don’t think about it, and don’t spend the money in your mind before you even receive it. Save it pronto and leave it there!
Other options for earning more include, getting a part-time job, renting space in your home, joining an online community where you can get paid to share your expertise.
Click this link to find other creative was to make money using peer-to-peer marketplaces.
Remember the key to this savings vehicle is to continue spending like you aren’t making more money so you can put the extra money you are earning in your savings account.
Realocate funds.
If you don’t currently have any opportunities to earn more, think about ways you can save that don’t feel (bank account wise) too painful. If saving is too painful, you simply won’t do it. Again these are mearly suggestions and some may have tax implications so speak with a tax professional before making these types of changes.
Do you currently make any extra principal payments on your mortgage in order to shorten the term of your mortgage? If so, would putting the extra payments on hold for a short time to save the money for your new goal make sense? If so, this could be an option that won’t feel like it’s impacting your current everyday lifestyle.
A similar strategy might be to reduce or pause money going into your 401k for a short time. Keep in mind however that if you do this, you will not get a dollar for dollar exchange since dollars going into a 401k are pre-tax. If you elect to reduce or eliminate the money allocated to your 401k, the money you will receive that can be added to your savings account will be an after tax amount.
Spring cleaning any time of year
Have extra stuff that you have accumulated that you don’t use or worse forgot you had? Do yourself a favor on multiple levels buy selling the items and finding them a new home. You’ll earn some extra cash that can go straight in your savings account, and you’ll free up space in your home. Sounds like a win-win to me. Try listing your items on Facebook Marketplace, Poshmark, Craig’s List, and other peer-to-peer selling sites to make extra cash that can be inherited into your savings account.
Cut out the fluff to spend less
If none of the above options work for you and your goals, you may need to bite the bullet and spend less so you can put more in your savings account. I know it’s easier said than done, but if you have something you really want to do or achieve this may be the necessary path to your goal. Think about the fancy coffee, lunch out everyday example. Are there other areas where you can cut your spending? Can you reduce weekend brunches, nights spent out on the town, clothing shopping, or costly services like cable TV? If you can make these types of sacrifices, you will see your savings grow.
Do you have other creative ways to save money or earn more? Please share I’m the comments below. Have you implemented any of the above strategies? How did it go? Let me know in the comments.
