Do you want to learn how to save money each month easily? Well, you will be glad to know that it is possible!
Whether you want to start saving for an emergency fund, save up for a major purchase, or just want to reduce your monthly bills and increase your savings, there are many ways to help you get started.
If you want to see more money in your bank account and less money going out the door, in this article, we’ll share everything you need to know about how to save money each month!
How much should I save each month?
Now when it comes to deciding how much to save each month, it all depends on your income, expenses, and financial goals.
But the golden rule is to save at least 20% of your income each month as this will help you build a secure financial future and reach your goals faster.
So after paying your bills, taxes, credit card debt, and any other financial obligations you have, make sure you set aside at least 20% of your net income for future investments or savings.
However, not everyone has the same financial situation, so you may need to adjust your savings rate depending on your current income and expenses. Try at least saving 10% of your income each month and then working up to the 20% goal.
So for example let’s say you are making $5000 a month, you should aim for putting $1000 into your savings accounts.
What to consider before saving money each month?
So now that you know how much money to save each month, let’s find out what you should consider before starting your savings journey.
1. Analyze your monthly income and monthly expenses
The most important thing you should do before starting to save money is to analyze your monthly income and expenses.
If you have multiple income sources like a full-time job, freelance work, rental income, and part-time gigs, then you should also track how much money you are making each month.
On the other hand, tracking your monthly expenses is equally important. Take out a piece of paper and write down all the bills you have to pay every month such as
- Grocery shopping
- Electric bill
- Auto insurance
- Credit card bills
- Rent
- Gas bill, etc…
If you have a checking account, you can also use your bank statement to keep track of all your expenses.
Once you have a list of all your monthly income and expenses, compare them to find out if you have more money coming in than going out – now you can work towards saving extra money each month.
2. How much debt do you have
One of the most important things to consider when saving money each month is the amount of debt you have.
If you have any outstanding credit card debts or student loans, you must make an effort to reduce and pay them off as soon as possible.
The more debt you are in, the harder it will be for you to save up money each month. So, if you want to start saving money each month, you should work towards becoming debt-free first or at least take control of your debt.
3. Your lifestyle
The way you lead your life or your lifestyle also affects how much money you can save each month.
If you are living a frugal lifestyle, you will have more money to put into savings. But if you’re living an expensive lifestyle, it will be harder for you to save money and reach your financial goals.
So make sure that you assess your lifestyle choices and make some changes if necessary. You have to understand that there is no point in saving money if you are going to waste it on things that don’t matter.
4. Your spending habits
Are you an impulse buyer?
If yes, then it’s time to take control of your spending habits. You must understand how much money you are spending each month and find ways to cut down on unnecessary expenses.
So do some research and find out where you can make cuts – from eating out to buying clothes, try to find ways to reduce your spending and start saving more money each month.
5. Areas where you can save money
Now there are two types of expenses every individual has to deal with – fixed expenses (like rent and bills) and variable expenses (like groceries and entertainment).
For fixed expenses, you can’t do much, but for variable expenses, you can find ways to save money.
For example, you can cut off your cable subscription and opt for streaming services like Netflix or Hulu. You can also look for discounts on groceries and make a shopping list before going to the store so you don’t end up buying items you don’t need.
Understanding the difference between needs and wants is important if you want to save money each month. So, analyze your monthly expenses in detail and find ways to save money on things that are not essential.
How to save money each month effortlessly?
So now that we have discussed some of the important factors to consider before starting your money-saving journey, let’s take a look at how to save money each month effortlessly and create significant savings.
1. Create a monthly budget
If you’re struggling to save money, creating a budget can make a huge difference. A budget is a plan of how you’ll manage your income and expenses each month.
You can start by listing all your monthly income, including salaries, side hustles, and other sources. Then, list all your expenses according to their priority.
Once you know exactly how much money is coming in and going out each month, you’ll be able to figure out how much money you can put toward savings.
You can also use your budget to pay off your debt, save more, and make sure that you’re reaching your financial goals. For example, let’s say you have a $5000 debt on your credit card.
You can create a budget that allows you to put money towards your debt every month so that you can pay it off in 3 years instead of 5.
2. Create an emergency fund
An emergency fund is a dedicated savings account that acts as a safety net for unexpected expenses. Simply save what you can each month and aim to save three to six months of living expenses.
Be sure to keep your emergency fund separate from your regular savings account to avoid spending it on everyday expenses. While building an emergency fund is a long-term process, saving even small amounts can provide peace of mind and gradually improve your financial security.
You don’t want any financial stress when emergencies like a medical bill or job loss arise. Having an emergency fund will help you tackle such situations with ease.
3. Set savings goals
Whether it’s paying off your car loan or saving up for a holiday, setting financial goals can help you stay motivated and achieve your long-term savings goals.
Create short-term objectives that are easy to reach, and long-term goals that will take more time and effort. Prioritize the most important ones first and break them down into smaller milestones so that they’ll be easier to track.
It’s also important to keep your goals realistic and start small. If you set too ambitious of a goal, it’ll feel like an uphill battle which can be discouraging. So, find the right balance between challenging yourself and setting achievable targets that are actually within reach.
When you see that your efforts are helping you reach your goals, it’ll give you a sense of satisfaction and help you stay focused on achieving them.
4. Pay off your debts ASAP
We have mentioned multiple times that having debt is not just stressful, but it can also affect your credit score and limit your financial options.
Therefore, it’s important to pay off your debts as soon as possible. Make a list of all the debts that you owe – think of student loans, credit cards, medical bills, and other types of debt.
Prioritize the most expensive debts first, such as high-interest credit cards, and work your way down. Paying off your debt early can help you save a lot of money in the long run, so make it a priority to tackle it head-on.
5. Shop with a list
If you want to learn how to save money each month you have to start with shopping smarter. Make a list before you go to the store and stick to it.
This will help you avoid buying unnecessary items and prevent impulse purchases. Additionally, if your grocery budget feels too tight, try cutting down on meat or processed foods as they can be quite expensive.
For other household items such as furniture or electronics, be sure to research the best deals to get the most value for your money.
If you shop without a list, you can easily overspend and put a dent in your savings. Because if you don’t have a list, you may just buy whatever catches your eye which can lead to buying items that you don’t need.
So the next time you shop, remember to make a list and stick to it!
6. Automate your savings account
One of the best ways to save money each month is to set up an automatic transfer from your checking into a savings account. This way, you’ll be able to move the money into the right accounts at the right time without having to remember to do it manually.
By setting up this type of automated transfer, you can reliably accumulate funds in your savings and start building your emergency fund.
Additionally, some employers offer direct deposit options that allow you to automatically split your paycheck between various accounts – such as rent and savings.
This is a great way to ensure that your bills get paid on time, while also building up an emergency fund for unexpected expenses.
7. Use cash instead of credit cards
When you use credit cards, it’s easy to lose track of your spending. Before you know it, you might have racked up a lot more debt than you had initially anticipated.
Using cash instead of credit cards can help reduce impulse purchases and help keep your spending in check. Plus, paying with cash will give you a better sense of how much money you have, since you’ll be able to see it physically.
Use your credit cards only when it’s necessary such as when you’re booking a flight or making large purchases – otherwise, try to use cash as much as possible.
8. Start investing more money
Investing your money is a great way to save for the future and there are multiple ways to do so. For example, a high-yield savings account can help you earn more interest than a traditional savings account.
High-yield savings accounts are also safe and insured by the FDIC, so you don’t have to worry about losing your money.
There are also other options such as:
- Stocks
- Mutual funds
- Exchange-traded funds (ETFs)
- Real estate investments, etc…
You have to determine what type of investment is best for you and your financial goals. It’s important to do your research before investing in any type of asset, as there are risks involved with all investments.
Once you have decided on an appropriate investment strategy, set up a regular contribution plan to ensure that you are consistently investing and building your savings each month.
9. Buy used items
Learning how to save money each month starts with being mindful of the items you buy. Whenever possible, opt for used or secondhand items instead of buying them new.
Not only will this help save you money but it’s also a great way to be more sustainable. You can find quality used items in places such as thrift stores, garage sales, and even online marketplaces like eBay or Craigslist.
By investing in quality used items, you can save a lot of money and enjoy the same benefits as buying them new. Plus, you’ll be contributing to a more sustainable lifestyle!
But if you are buying items such as electronics or furniture, it’s okay to pay a bit more for something new as long as you can find good value for your money.
By being mindful of the items that you purchase and looking for ways to save, you will be well on your way to creating a budget-friendly lifestyle!
10. Track your monthly savings
And lastly, it’s important to track your monthly savings and spending so you can stay on top of your finances.
Several apps and websites can help with this, such as Mint, YNAB (You Need a Budget), or Personal Capital. These tools make it easy to set up budgets, monitor your spending, and view your investments.
Some of them are free and some of them may require you to pay a monthly fee – so make sure to do your research.
If you want to go old school, you can also use a paper budget or spreadsheet to track your spending.
Whatever method you choose, make sure to review your progress regularly and adjust accordingly. This way, you’ll have an accurate picture of where you stand financially and be able to make smart decisions about your money.
The goal is to create a budget and lifestyle that works for you, so keep track of your progress and stay motivated to reach your financial goals!
Conclusion
So there you have it – now you know how to save money each month! With these money-saving tips mentioned above, you’ll be well on your way to creating a budget-friendly lifestyle and reaching your financial goals. It won’t happen overnight but with dedication and discipline, you can start to see progress in no time. Good luck!
