Many people have little or no savings.
I often hear about friends that spend every single dollar of their salary each month without ever thinking about their savings.
Recently, stories about Americans have surfaced and have been quoted in the personal finance sphere.
One in three Americans have less than $5,000 in savings for retirement and 78% of Americans are concerned about not having enough money for retirement. I can understand why; having less than $5,000 for decades of retirement is scary!
Not having any savings is not only dangerous for retirement. Even small unexpected expenses can cause great trouble for you regardless of where you are in life if you don’t have any savings.
Regardless of age, I believe everyone should work on building up their savings. I am saving 30-50% of my salary each month because I work towards financial independence, but even if you don’t, you should always save a share of your salary each month.
I realize that people with a very low income might not be able to save a lot, but most people will be able to save something.
My five tips to start saving money already today
There’s several things you can do to start saving already today.
The most important thing is getting started – even if you just save a couple of dollars to begin with.
As soon as you start saving a little, you will discover that you can continue living a normal life even though you have a little less to spend each month.
At the same time, nothing beats the feeling of seeing your savings grow month after month, so you might even start to save a little extra each month.
Before you can start saving money, you should set up a savings account with your preferred bank. It can make sense to shop around a bit to find the ones with a decent interest rate and without minimum balances.
Once you have set up a savings account, consider making automatic deposits every month – this way saving will happen automatically and you will not forget it.
1. Get rid of your consumer debt
Once you have a savings account set up, my best tip to start saving more money is to avoid paying interest on expensive consumer loans every month.
In general, you should avoid all types of consumer debt. Paying interest on loans is money out of the window every month, so I would start getting rid of your consumer debt as fast as possible before focusing on starting to save money, although psychologically it can make sense to start saving a little each month while you pay down your loans as fast as humanly possible.
2. Stop buying things
In our modern society, our brains have been wired to think that we need to buy all sorts of things all the time.
In reality, you do not need even a fraction of all the things you buy. You discover this as soon as you stop buying things – and you start saving money instantly when you stop.
If you have to buy things such as furniture or clothes, you can easily start saving money by buying it second-hand on the internet or in shops.
You should only buy durable, quality things that are made to last a century (very few things pass this test today) rather than low quality things that only last a season.
3. Reconsider transportation
Transportation (and often cars) is one of the largest expense categories for a normal family.
It might not be the easiest way to save money, but trying to configure your lives with a minimum of transportation needed, so you can use public transportation, ridesharing services or bike around will have a large impact on your savings.
Even if you need a car once in a while, you could borrow or rent a car for those occasions, and you will still save a lot of money.
If you already live relatively close to work, you should definitely consider biking as it has many benefits including being super healthy.
4. Plan your meals and avoid take-away
Food is a major expense for many families and a very easy way to start saving money is to plan your food purchases much better.
You can drastically lower your expenses by planning all meals for an entire week while focusing on re-using ingredients across meals and reducing food waste. There’s plenty of meal planners online, so make sure to check out those too. I shop all my groceries once a week and it works perfectly!
Try to avoid take-away food as it is often more expensive and/or unhealthy – and eating out can obviously also throw your budget off if you do it often.
I’m not telling you to never eat take-away or dine out, I’m just saying you will be able to start saving more money today by not doing it as frequently.
5. Go through your subscriptions
You often get surprised when you find out how many subscriptions you blindly pay each month.
An effective way to start saving money is to go through your subscriptions, e.g. TV, phone, internet, newspapers, fitness, music streaming, audio books and other membership clubs. Since these subscriptions often occur monthly, you will be surprised how much money you pay each year for these services.
You should carefully consider whether you need all the subscriptions and either re-negotiate or cancel the subscriptions.
If you cancel a subscription, it is a perfect time to increase your savings by the same amount you have saved! 🙂
Those were my best tips for how to start saving money today – I hope you could use some of them.
Your turn: What’s your best tips for how to start saving more money?