A 2019 Guide To Saving Money

by Kahlia Meeuwsen, Money Columnist


Published in Money and Finance on 31st January, 2019


Saving money is something that is on everyone's mind.

No matter where you are on the income ladder, it's always a good idea to be saving for emergencies, retirement and other important endeavors. However, it's not always easy! Often, just the thought of addressing our financial concerns head on can be enough to make us want to bury our heads in the sand.

That said, you're likely to find that once you start tackling financial concerns, it only gets easier. Things like wiping out debts, paying into retirement and building a nest egg can become second nature over time. It's just a matter of getting there!

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Let's take a look at how you can make it happen!

We All Want More Money

Money is something we all spend a decent amount of time thinking about. Maybe we don't have enough of it, or maybe we're concerned about how we're handling it. In many cases, there can be problems in both areas that need to be addressed.

Many people out there are concerned with saving more money, whether that's for a specific goal or just to have a nice nest egg to lean on. However, that saving can get tricky! You never know when something is going to pop up and limit or obliterate the savings you already have going.

In other cases, it can be difficult just to get started, or you may be frustrated that the amounts you can save seem to be miniscule. Gaining a better understanding of the types of savings out there and what tips you can use to reach your goals is a great way to get started on improving the process.

Types Of Savings

There are a few different things that we can choose to save money for. For the shorter term, we may be thinking about having an emergency fund, working toward a goal for a vacation or other large expense, or retirement. Whatever is important in your life can become a savings goal!

The Nest Egg

This can also be thought of as your emergency fund. Essentially, this is money saved for the short term that is meant to cover unexpected expenses, emergencies and keep you safe in the event that you lose your job.

Typically, this amount should cover at least three months of regular expenses, but some choose to build up a fund that can sustain them for up to a year. It's entirely up to you how much you want to save. Most choose to start with a single month, and figure it out from there!

Retirement

While retirement is far away for many of us, it's still one of the most important things we can save for. Not only does it allow us to enjoy our golden years without having to work ourselves to the bone, but it's made to help us with things like emergency expenses that can come with age.

Because of that, it's a good idea to be saving as much as you can for the sake of retirement. If you're at a point in your life where that's only a small amount, then save it anyway. A little bit in a retirement account is far better than none at all.

Other Savings

This is where you'll consider savings for specific things, like a trip or new car, or savings for a pet in the event that they become ill as they age. Vet expenses can become quite pricey, so it's worth having some money built up for them!

Tips For Saving Money

By making use of these tips, you can strive towards saving more money, or saving any money at all if you've struggled with it. It can help to think about what you're having the most trouble with when it comes to saving money and work on the tips that address that problem first.

Pay Off Debts!

There are very few of us who don't have credit card debt, loans or other kinds of debts that we need to pay off. Over time, these debts build up interest that make them more troubling. Sometimes you can feel like the money you're sending to cover that debt isn't having any effect at all!

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Because of this, it's wise to make a concentrated effort to pay as much as you can to get these things paid off. While it might require a strict budget for a while, it's an extremely freeing thing to know you'll no longer have that debt and the interest it builds looming over you.

Open A High-Yield Savings Account

Saving smart is key to ensuring you are using your money in the smartest ways. Opening a high-yield savings account, like those offered by Ally, are great ways to save money and build up positive interest that can help your nest egg to grow!

These accounts can also make it harder to spend your saved money impulsively. Just take a look around and find a savings account with a reliable business that provides a great savings rate and start tossing money into it. It'll be out of sight, out of mind and steadily growing.

Stick To Your Budget

Budgeting is often something that sounds easy, but can actually be pretty difficult. There are often expenses we don't expect, or other circumstances that may take up any funds we had expected to save. As a result, it's important to track where your money is going and start making small changes.

Once you've developed a budget that works for you, make it more difficult to go beyond your limits. Use cash when you can, and be very mindful of any money spent, especially if it's not on bills or necessities. It's tough to get started, but well worth it!

Pay Yourself!

The concept of paying yourself is one that comes alongside thinking about retirement. In order to enjoy retirement, it's important to have plenty of funds stored away for when you can no longer work or prefer not to work so that you can enjoy your golden years in peace.

Typically, it is recommended that 10 or 15% of the income you have should go into a retirement account. However, if you can afford to save more then it's absolutely recommended to do so. If you can't afford that much, then try to save anything you can.

Getting The Bills Paid

Paying your bills on time is something not many may think about, but those late bills can really add up. Late fees, missed payment fees and more can end up taking away from your available funds. This is especially true when you have more than one bill that is late or missing.

If your bills are late, don't feel too badly. It happens to us all from time to time! Just work on a plan for bringing them back up to date so that you're on track. Then you won't need to worry as much about late fees, and that extra money can go into savings.

Saving Automatically

A great way to make sure you're regularly saving money is to set up an automatic withdrawal for your savings account. That way, each month or for every paycheck, a certain amount of money will automatically withdraw from your checking account and go into savings.

If you treat this process like another bill, it's likely to improve your ability to save. Consider it non-negotiable, and make sure that amount is available in your account to be withdrawn. If you aren't typically great at saving, you can challenge yourself to change the amount withdrawn if needed, but never cancel it entirely.

Take A Look At Your Bills

It can be easy for us to get into the habit of paying our bills automatically without thinking about the amounts we're seeing. However, the next time you take a look at your bills, consider thinking about some ways in which they could be brought down even a little.

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This might mean something as simple as turning the heat down, using less hot water or making sure lights are off when they aren't needed. In other cases, you may want to take a look and see if there are any new phone or internet options you may have that can bring the bills down.

Cook At Home!

The food we buy at the grocery store can often be less expensive than eating out, even if you're eating fast food. In addition, it's much healthier overall. Things like vegetables, rice and beans can allow you to make delicious meals quite easily and save a decent amount of money.

If you aren't a fan of cooking, then you can still look for some simple, quick meals that will help with saving money, but don't require a ton of prep or cooking. These recipes can be extremely helpful to have on hand!

Use Public Transportation

Many people don't like to take the bus. It can be crowded, uncomfortable, or even loud. However, taking the bus from time to time can really lower the amount of money you spend on gas. If you don't like the bus then you can also opt to carpool or even take a taxi or something similar!

It's also worth noting that you may not have to choose public transportation every time. For some, taking the bus or riding their bike a couple times a week can bring their public transportation spending into a more acceptable range. It's up to your unique situation!

Set Goals

Goal setting is very important when it comes to savings, and it can help you to snowball smaller amounts into larger ones as you reach your goals. For example, a great place to start your savings is with enough money for a month's worth of basic expenses.

Once you reach that amount, you can opt for two or three months of expenses. This money will essentially cover you if there is a job loss or emergency that you'll need funds to cover. Ideally, you'll have at enough funds to cover at least three months, though many prefer to aim for six.

Spend Less Whenever Possible

It's wise to remember that the amount you have set for a given aspect of your budget is the limit, but it's always a good idea to be under that limit if you can. For example, if you have a monthly budget of $300 for groceries, but find that you're able to sustain yourself on $250 in groceries, then don't spend the rest!

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Instead, you can send that money to something else that is needed, or ideally, add it into your savings account. Whenever you can work under your budget, you're helping yourself to save more money, so make use of coupons, sales or whatever else you need to for that purpose!

Track Spending

It's always a good idea to know where you're starting from. Consequently, tracking the spending you're doing is key for this. You can use a spreadsheet, an app or just write down what you're spending for about a month, and then take a look back at the expenses to evaluate them.

Remember to avoid judgment during this process, and just look for ways you can spend less in the future. Over time, you can streamline your spending habits to make them more efficient and maximize savings.

Find Extra Work

If you want more money going into savings, or you're just not making enough to get ends to meet, then picking up a little extra work can be a good idea. This might mean applying for a part time job, taking a shot at freelancing or figuring out how to turn a hobby into a money-earning pursuit.

It can help to think about the things you already enjoy doing in your free time. Do you like to crochet or knit? Consider selling what you make! Enjoy playing video games? Try making a few videos to put out into the world. It doesn't have to be something traditional, unless that's what you prefer!

Quality Over Quantity

There are times when attempts to save money can backfire. As a specific example, imagine you're in need of a new toaster. In an effort to save money, you look for the least expensive toaster you can find and purchase it. However, within just a couple of weeks, it stops working.

For some kinds of items, price can definitely be an indicator of quality. In the above situation, you end up having to spend more anyway because the first toaster you purchase breaks. Instead, consider a balance between quality and price, so that you can purchase one item that will last for the long term.

Cut Out The Luxuries

While shopping, it's wise to think about what you really need, versus what items you just like to buy for luxury purposes. Consider what items you really need. For example, we need things like food and toilet paper, but we may not really need new nail polish or a new grill when the old one still works.

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Sometimes, these luxuries can be afforded. From time to time, they make for nice treats. However, if you're holding to a strict budget then it's best to view them as just that, treats.

Avoid Impulse Spending

It happens to us all. Sometimes you come across something and you know you don't need it, but you just want it so badly. You may think to yourself that if you could just have this one thing, you won't want anything else for months.

However, that's simply not always true. Think about how many things you've wanted in the past month. If you spent money on all those things, saving would likely be difficult. Instead, try to abstain completely or consider the item you want most, or will get the most use from, and purchase that single item.

Consider The Long Term

Things like retirement, or even that vacation next year, can seem so far away. However, time slides by more quickly and quietly than we may notice. Consequently, it's important to make sure that you're thinking about long term goals while you're considering spending money, or thinking about how much you want to be saving.

It's typically better to make some sacrifices in the present moment so that you can have a better future than it is to do the opposite. Remember that having money in savings can also be more helpful in emergencies than the latest game or clothing trend.

Try A New Perspective

Saving can be a difficult thing. There are some mental traps we can fall into that end up making it much harder to get what we need. For example, thoughts like "just this once" or "this is the last time" can end up dragging on, taking up funds and making saving a lot more difficult.

Instead, try to change your perspective. Remind yourself of why saving needs to be a high priority, and take everything else in moderation. In time, you can adjust your thinking and avoid strong impulses to spend money unnecessarily.

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