Did you know that almost half of the entire American population is in debt? According to research, approximately 47% of US adults are in credit card debt and cannot see the light at the end of the tunnel.
Being in debt is both debilitating and paralyzing. Not only does it restrict you from living your desired lifestyle, but it also causes stress and can lead to depression. It is essential to know the latest tips for saving your money so that you can avoid the painful downhill spiral of continuous debt.
The question is, what are the best ways to save your money and improve your financial health? There may be a lot of money-saving tips out there, but only a few of them will work for you.
Thankfully, we’ve compiled this article to share some of the most effective tips for saving your money. Keep on reading to learn more about how you can achieve the financial freedom you deserve.
1. Be Aware of Your Expenses
The most important tip for saving your money is to be fully aware of all of your expenses. A common problem that many people have when saving money is to hide from their bills and focus more on their paychecks. Unfortunately, your bills are not going to disappear, so you must face all of your expenses so that you can work out a plan for paying them off.
Begin by creating a complete list of all your expenses. Then start by divvying those expenses into two main categories:
Essential expenses include the items and services that you cannot live without. This includes rent payment, electricity bills, car payments (if you need your car for work transportation), cell phone bills, food, basic clothing needs, health/medical expenses, and health insurance.
Non-essential expenses are any payments and services that you can remove to save more money. Keep in mind that saving money is about liberation and freedom from your financial problems, try not to deprive yourself of a quality life so you can save more money.
Services and bills in this category include eating out, gym membership, cable service payments, online subscriptions, magazine subscriptions, nonessential app payments, and nonessential clothing.
2. Reconsider Your Payments
The next important tip for balancing your budget is to get serious with what you are spending your money on. This includes memberships and subscriptions that you are not using. According to a recent survey, Americans waste over $1.8 billion on unused gym memberships.
So if you are paying for a gym membership and never go to the gym, you are wasting your money. For example, if your membership is $30 per month, you are throwing $360 per year, which could go towards paying off your credit card debt.
3. Get Money Smart
There are numerous ways to cut your expenses without affecting your quality of life. This is also an opportunity to get creative, create some financial strategies, and find enjoyment out of the simple pleasures of life.
Some money smart ways to cut your costs are:
- Rent instead of buying. If you only go camping once per year, there is no point in purchasing a lot of expensive camping gear.
- Make food instead of eating out. Try getting creative in the kitchen instead of buying food in restaurants. You will be amazed by how much money you save!
- Purchased used items. Thrift store shopping is not for poor people. Check out your local thrift stores or consignment stores for clothing and household items instead of buying new.
- Try the “buy nothing” challenge. Challenge yourself to spend an entire week without spending a dollar.
- Use the library instead of the bookstore. Books can range from $10-$30 a piece, while library books are free to read.
By becoming more money-smart, you will be amazed by how much you can save and apply to your debt.
4. Use Only Cash
One of the best tips for saving your money is to challenge yourself with only spending by using cash, instead of credit or debit cards. According to research, shoppers spend up to 100% more when using a credit card to pay versus those paying with cash.
Go to the ATM once per week and take out a specific amount, then plan your week accordingly so that you do not spend more than that allotted amount.
5. Create a Savings Bucket
A great money-saving trick is to divvy up your savings into multiple buckets, or bank accounts. Each account or bucket should be designated to a specific payment or bill that you want to pay off.
The moment your paycheck arrives, place an allotted amount into your day-to-day account for bill payments and daily expenses. Then take the rest of your paycheck amount and divvy it up into separate accounts.
For example, one account could be for a vacation fund, another could be a new car fund, and the other one for a new laptop. Place an amount into each account that seems applicable for the total cost, such as $100 for the new car, $50 for the vacation, and $50 for the laptop.
6. Wait Before Purchasing
If you tend to make purchases on impulse, it is time to create some boundaries around your spending habits. When you feel the urge to buy something, force yourself to wait a few days to think about it. This will help you to cut the emotional ties to what you are spending money on, and help empower you to make better financial decisions.
7. Switch Out Your Car
If you have an expensive car with high monthly payments, you may want to reconsider the necessity of your vehicle. If you purchase a car from the dealer, you immediately lose a percentage of its worth the moment you drive it off the lot.
Additionally, if you have an expensive lease, you are probably paying half of that in interest fees. Do some critical thinking and decide whether you really need that Audi, or if you could be driving a Honda instead and still enjoy your drives.
Learn More Tips for Saving Your Money
By following these creative tips for saving your money, you are ensured that you are on the road to the financial freedom that you desire.
Remember to be patient in the process, as saving money does not happen overnight. The more you celebrate small victories such as paying off a particular credit card, the sooner you will have the rest paid off as well.
To learn more about saving money, and to explore a short-term strategy to help cover unexpected expenses, check out our information about how car title loans work.