How to Save Money (if you suck at it)
In the video above, I give you some ideas and techniques you can use to help you save money, especially if you've had trouble doing so in the past! I hope this video helps set you off on the right track to getting better control of your finances.
How to Save YOUR FIRST $1,000
I recently put out a video on how to invest $1,000, but what if you don’t have $1,000 saved up to invest? Well, in this video, I’m going to show you simple ways to save so you can have that emergency fund, save up for a big expenditure like a down payment on a home, or simply invest it.
Intro
When it comes to saving money, the most common advice is to cut your expenses or increase your income… or a combination of the two. I’m guessing you may already know that, so I’ll try to dive in a little deeper with some actual techniques that can help you save if you’ve had trouble doing so in the past. Everyone has a different financial situation, different needs, and different spending habits,
I also made a video about how to save on monthly expenses without having to cut out some of the things you enjoy, so check out that video for more saving ideas if you haven’t already.
Track your spending
The first step is to first find out where your money is going every month. If you don’t have a monthly budget and instead just kind of wing it – I understand, but sit down once a week and go through all of your credit card and bank transactions to see your expenses. Since it seems like everything nowadays is a monthly subscription, there may be services on there that you no longer use and are still getting charged for.
I use Truebill to track my spending, which is a free service, and will show you monthly recurring charges and will notify you of any big purchases so you can have a solid handle on your finances.
You can also use something like Mint which will also track your spending and send you a weekly report on where you spent your money for that week.
If you are more disciplined, I would recommend creating a budget. You can simply use a spreadsheet or there’s about a few hundred services like You Need a Budget or Every Dollar that can help you create a budget so you can stay on track.
If you don’t want to sign up for another service, I totally understand. I made a simple budget spreadsheet that not only helps you get an idea of where your money goes, but also how much you can save every month and how much those savings can be worth if invested.
You can download the spreadsheet for free here and open it in Excel or Google Sheets and input your numbers.
You can set the annual interest rate – which I have at a pretty reasonable 8%, but you can adjust that as you’d like.
If you can only save $100 bucks a month, you may feel like it’s not even worth saving at that point, so you might as well just spend it. But that $100 a month can turn into $7500 in five years to really give you that savings cushion. $650 per month will be close to 50 grand after five years.
Automatic Transfer
One thing that I started doing a few years ago with my bank is an automatic transfer from my checking account to my savings. I set up just a small automatic transfer of $200 from my checking account to my savings every month that just moves the money over to start building up a savings account over time. If you’re the type of person that tends to spend what they have available in their checking every month, simply moving it to your savings may help you to second-guess that impulse purchase and encourage growing that savings account.
Another technique you can use is once you get a pay raise, instead of buying a new car or moving to a nicer apartment, take that pay increase and automatically move it to your savings account every time you get paid without upgrading your lifestyle. So, if you work 40 hours a week and get a $3 raise at work, set up an automatic transfer of $480 to your savings every month. Not only does this help you save, but it helps develop a habit of not inflating your lifestyle when your income increases.
Round Up
Another hands-off approach to saving is using a service that will automatically round-up your purchases made to the nearest dollar and then automatically invest the difference for you. I used Acorns in the past to do this since I like the idea of saving money without having to really think about it.
I started with Acorns at the end of 2014, and the first month I had about $25 in round-ups that were automatically brought into Acorns and invested in diversified funds.
The amount you save will depend on how much you spend that gets rounded up, but you can also set up automatic transfers every month to your account for additional saving and micro-investing. By the end of the 2015, I had about $360 saved up, which isn’t mind-blowing or anything, but considering I didn’t really have to do anything other than going about my daily routine, it’s not bad. At the end of 2016, I had $773 in my account. At the end of 2017, I had almost $900 saved up in Acorns. So again, that is a long period of time, but I didn’t do any additional deposits. If I would have set up my $200 automatic transfer to Acorns every month, the account would’ve been well over $7,000.
Side Hustle
If you’ve already cut all of the expenses that you can and can’t round-up what you do spend, it’s likely the answer to saving up is increasing your income – which I know can be tough. Luckily, with the gig economy and the power of the internet, there is a lot of available options out there. Whether it’s selling on Fiverr, trying print-on-demand, doing Uber or DoorDash or even online surveys and promos, you may be able to create some additional income without getting a second job.
If you know how to fix broken phones or Xboxes or computers – you could buy them on eBay or Craigslist for cheap, and then fix and flip them.
I’ve tried out a lot of side hustles, so I know it can be tough, but it’s also possible to bring in an extra $15 to $20 per hour by doing so.
Sell Something
Another thing you can try to help kickstart your savings is by selling anything you have that you simply don’t need or use anymore. And I know – if you’ve been struggling financially, you may not think you have anything worth selling or you would’ve done so already, so maybe this won’t work for you. But even if you have some decent clothes that you don’t wear anymore, a site like ThredUp will send you a box to fill and send back. If you have eligible items that end up selling on their site, you’ll get paid.
Old video games and consoles may retain their value pretty decently, so as much as I hate to say it, you could offload some of the best N64 games on eBay if you wanted.
Or if you’re lucky, maybe you have Pokemon cards you can sell to Youtubers.
You’ve got tons of apps like OfferUp and Mercari that make selling stuff pretty easy, and you always have Craigslist, Facebook Marketplace, and eBay as well.
Final Thoughts
I think one of the hardest parts with saving money is getting started and then continuing to add to it on a consistent basis.
This is why I think even if you pick up a side hustle for a month or two, sell something, or stash away a tax return or bonus instead of looking to buy something you may not need is super important. This is one of the reasons why I like the gamified savings route that sites like Yotta have done, which can make saving more fun and encourage you to save more.
Once you start to make it a habit, set goals for yourself. I recommend starting small so you don’t get discouraged, which is why I think $1,000 is a good first benchmark. After that, your goal could be an emergency fund of 3-6 months worth of living expenses. Financial stress is one of the worst kind of stresses out there, but you can help to get ahead of it by developing good money management habits.