Most of us know we should save more money than we're currently saving ... but that's easier said than done. If you feel like you're scrounging for change and can't figure out how to possibly save more, don't despair. Here are 6 tips to get you closer to your savings targets this year, no matter how ambitious or modest your aims may be.
1. Get Clear on Your Goals
It's not enough to say that you want to "save more." You need a precise figure and timeline, such as, "I want to save $25 per week in my Future Car Repair fund."
This helps on both a practical and an emotional level. It's hard to reach a goal when you don't know what exactly you're working towards. Resolving to "save more" is all well and good, but if you don't know what that looks like in action, it will be hard to follow through.
Get clear with yourself on how much you want to set aside each month and, just as importantly, why this goal is important. "I want to create a $1,000 emergency fund so that I can sleep more easily at night," and "I want to save $50 per week towards this emergency fund" are two examples of concrete, actionable goals that give you a game plan and a measuring point to track your progress.
Having set goals in mind can also help you stay on track when you start to feel frustrated or get distracted by temptations. It's easy to justify purchasing that new gadget even though you'd "like to save more," but when you know "saving $X per month will give us money for a vacation this year," you find new reserves of discipline.
2. Automate Your Savings
We are human, and we make mistakes. Life happens, and its effects are often unexpected.
Both of these statements are reasons why you should start automating your savings. If you wait until the end of the month to see what sort of money is "left over" to put into savings, you'll never wind up having as much as you hoped.
Instead, set up an automatic transfer at the beginning of each month or each pay period. Send a certain amount straight to savings, before you can spend it on anything else. Out of sight, out of mind.
This way, a portion of your money is safe from temptation, and you won't view that money as "excess" you can tap should unexpected expenses arise. (If they do arise, you'll just have to get creative about how to address them. Maybe you can slash your entertainment budget for the month? Start waiting tables or babysitting on the weekends? Carpool to save money on gas?)
3. Save the Extra
Statistically speaking, you'll never win the lottery. But throughout the year most of us come into a little "extra" money that's not represented in our regular budget. Maybe you get a performance-based bonus at work, a surprise tax refund, or commission on a sale that you helped facilitate.
When these little windfalls come in, resist the urge to spend. Put this money directly into savings, and "give it a job" - such as maxing out your retirement account or getting devoted to the down payment that you're saving for your next house.
4. Stick to Your Budget
Speaking of budgets ... you do have one, right? And you're pretty good about sticking to it as close as you possibly can?
If you answered "no" to either of those questions, do whatever it takes to change that answer to "yes" in the months to come. Until you're able to set (and stick to) a realistic, disciplined budget, you'll never be able to save as much as you'd like.
5. Shop Smarter
You can't get away from certain expenses like groceries, but you can make sure you're not spending more on them than you need to. Shop smarter, and you'll free up more of your money to work towards your savings goals.
When it comes to grocery shopping, start planning your meals in advance, shopping with a list and buying fresh foods instead of packaged or processed items. If you're contemplating a big purchase, wait 30 days to make sure you still want the item. (There's a good chance you won't want it anymore after a month has passed.) If you see something on sale, resist the urge to make an impulse purchase. Sales can sometimes be worse for our budgets, rather than better, because they lure us into spending money that otherwise would have stayed in our wallets.
6. Don't Forget Retirement
A crucial part of any savings strategy is making sure you're setting aside enough for retirement. As a general rule of thumb, you should set aside 10 to 15 percent of your income in a retirement fund.
If that sounds like too high of a number, take advantage of an automatic investing plan that takes $100 a month (or more) out of your checking account and invests it in your retirement fund. This may not seem like much, but that extra $100 a month will make a big difference over time.