We all know that we need to save more money, but where to begin? Here are a few tips for integrating money-saving strategies into your everyday routine.
Although we’re constantly being told that the economy is on the upswing, a shocking 40 percent of Americans couldn’t handle a sudden $400 emergency expense. So, even though the number rideshare opportunities and other side hustles that masquerade as employment are on the rise, our ability to save money appears to be on the decline.
When our economic situations are becoming increasingly fragile, how can we save money for retirement, healthcare, vacations, or emergencies? Keep these budgeting solutions in your arsenal, and you’ll be able to build your savings incrementally and reliably.
- Envelope spending. This strategy is for people who prefer transact almost exclusively with cash. Withdraw a certain amount of cash every month and keep designated amounts in separate envelopes – food, entertainment, household items, bills, gas, etc. This is more successfully used for any payment that varies from month-to-month, since these payments often cause people to stray from their budgets. Because you can see the money diminish throughout the month, it can incentivize you to curb your spending. Of course, any cash left over goes towards next month’s fixed amount envelopes, so you can withdraw less.
- 50/30/20 budget. This involves segmenting your monthly expenses into three categories. Mandatory expenses (bills, food, gas, mortgage/rent) are 50 percent of your income. Non-essential spending, like entertainment, trips to the salon, and luxury items are 30 percent of your income. The final 20 percent goes into personal savings, emergency funds, and financial security.
- Debt Snowball. If you have debt from multiple balances, the debt snowball strategy involves paying off the smallest balances first, regardless of the cost or fees. This gives you a sense of accomplishment, spurring you on to clear your entire debt burden.
- Debt Avalanche. The debt avalanche method requires you to pay off the most expensive debt – like high interest rate credit cards. This solution can save you a significant amount of money, though the individual debts can take longer to clear than with the snowball method. You can also find lower interest, reduced-fees cards to support the avalanche strategy. (Brim Financial offers a low-cost and rewards-rich card, if you’re looking for a flexible and secure option.)
Budgeting can be a chore, but it becomes easier as you become accustomed to your new, more streamlined lifestyle. Once you’ve enriched your savings and said goodbye to your debt, you probably won’t even remember how you mourned your canceled Hulu subscription!