Outside of the money you must spend to live your life, such as shelter, food, healthcare, and so forth, are all non-mandatory expenses that can be classified as wants. If you make savings a mandatory expense, at least in your mind, you can ensure that you’re saving enough to meet your goals today and in the future. Let’s look at some simple ways to ensure you meet your savings and investing goals.
- Consumer Debt First – Other than saving a small amount, such as about $1K for emergencies, start paying off your consumer debt right away. If you have consumer debt, you’re canceling out your savings and investments. Don’t keep any consumer debt (credit cards, unsecured debt) longer than a few months and only when you’ve planned it.
- Round It Up – There are numerous accounts and cards that will round up every purchase you make and add the cents into a savings account. This is a perfect way to collect money in savings without even thinking about it. There are several apps to try, such as Acorns.com and Wealthfront.com.
- Budget Your Groceries Better – It’s incredible how healthily you can eat when eating at home. However, many people tend to spend more than they need to on groceries. You can follow a healthy and nutritious plan that saves a lot more than you think. Many people save a few hundred dollars a month once they start budgeting and planning their meals better. Look for low-cost veggie delivery or pick up meal boxes, and more.
- Watch Your Auto Subscriptions and Memberships – Today, due to technology, you can be “dollared” to death. A few times a year, double-check all your automatic subscriptions and memberships to make sure you’re utilizing them as much as you thought you would.
- Only Buy Used – Most things that you need can be found for pennies on the dollar used, and barely used at that. From clothing to furniture, buying used is very good on your wallet. If you’re patient, you can find everything you need with few exceptions.
- Organize What You Have – When you keep your things organized, you’re less likely to buy duplicates. Ensure that you use some of your budget to purchase the right organization tools to keep your stuff well cared for, so it lasts and is in a place that makes it more usable for you.
- Automate Your Savings – Once you have decided how much you’re saving and investing, don’t leave it to chance. Set it up so that it’s automatically taken out of your check before you get it, or out of your bank account the moment the money is deposited so that you don’t have to think about it.
- Use Unexpected Income or Windfalls Wisely – Believe it or not, at some stage almost everyone ends up with some money they did not plan for. When this happens, always use it the smartest way possible, such as by using it for savings or to pay off consumer debt. And if all that is taken care of to your satisfaction, you can use it for something fun.
- Reduce Your Energy Usage – One thing you have a lot more control over than you may think is your energy usage. Learn how to save money on electricity by using your dishwasher at less expensive times, wearing your clothing more than once before washing, and using energy-efficient bulbs and appliances.
- Unsubscribe to Marketing Emails – It’s hard to save when there is temptation everywhere. If you’re trying to recover from being an over-spender and you really don’t need anything, cancel every marketing email that you get as they come through or use a throwaway free email address when you sign up for things.
- Borrow More Things – Don’t be a pest, but there is no reason to buy a truck if you only use one twice a year. The same can be said for many things that you only need occasionally. You can borrow from friends and family or even rent a lot of things like that. If you do borrow, take care of it and return it and then do something nice for the buyer.
- Don’t Eat Out – If you’re trying to save for your emergency fund and don’t have at least three months of expenses if you’re single and six months if you have a partner, then you should not eat out. Eat at home to save money and avoid eating out until you have an emergency fund. Take your lunch to work, and meal plan for home.
- Pay in Cash – When you do go shopping, even on vacation or out with friends, take only cash with you. When you only have cash, it’s harder to overspend because it’s embarrassing not to have enough cash. Using your debit card for every single purchase is fine if you are also keeping track with software, so you know your daily number exactly.
- Ask about Discounts – When shopping for anything, don’t be afraid to look for and ask directly for discounts. If you don’t ask, you won’t get it. You can even ask for the “cash price” for medical care and usually save 30 percent or more. Use sites like eBates.com when you must buy new, to help you save money and earn money back.
- Use Your Work Retirement Savings Plan – If your work offers any type of savings and investing retirement plan, it’s imperative that you participate in it. Usually your employer will match a portion of your contribution. It’s simple to participate and when the money is just taken from your check before you see it, you don’t notice it as much.
- Lower Your Cell Phone Bill – You probably don’t need as big a plan as you think. Also, there is a lot of competition. At least yearly, call your company to try to get a discount, but don’t lock it in. Call around and get more offers.
- Freeze Non-Essential Spending Temporarily – One way to ensure that you save for your emergency fund is to stop spending on anything but your essentials such as rent, utilities, food, insurance, and so forth. Don’t go to the movies. Don’t eat out. Don’t buy any extras and stick to the basics for a specified period in order to fund your emergency account.
- Do More Things Yourself – If you can do it yourself, do it. Make your own food. Do your own hair. Fix your dishwasher yourself. The more things you can do yourself instead of outsourcing while you’re trying to fund your emergency account, the better. You can resume outsourcing once your emergency account is funded and your consumer credit is paid down.
- Skip the Coffee Shop – While it’s easy to drive through a coffee bar and get that delicious drink, it’s too expensive. Just one a day three days a week will add up to about $800 or even a grand a year.
Find an investment calculator and plug that yearly savings number in to find out how much retirement savings you’re missing out on. (Hint: If you saved $100 a month for 20 years at a realistic 6 percent interest compounded daily, you’d have almost $50K saved due to the beauty of compound interest.)
- Use the Library – Depending on where you live, your library may be a goldmine. Many libraries today have free Wi-Fi, movies, books (including digital and print), and more. They often have programs and even movie nights for activities. Go join your public library and get on the mailing list.
- Sell Your Junk – If you have been a consumer up until now, you can also sell the junk you don’t use. Even if it’s not really “junk”, if you don’t use it, consider selling it. You can likely put the money you get to good use instead of just housing stuff you never look at or use.
- Get Creative with Vacations – Even when you’re trying to save money and build your emergency fund, it’s important not to stop all the fun forever. Sure, until you have funded the emergency fund and paid off consumer credit, you want to be careful. But you can still have a vacation and have fun. Just get creative about it. Save and plan for it, and don’t do it last minute. Consider a staycation but if you do that, become a real tourist in your area and don’t just sleep it away.
Like with most things, if you’re going to spend your money, always investigate the company or business you are going to work with. Don’t just listen to your friends and family; check out the company and the person because scams do happen – even to your friends and family, and you don’t want to be a victim.
Use Automation and Technology
One thing that millennials are good at is using technology. You probably already use a lot more automation than your parents and grandparents do. Let’s look at the many types of automation and technology that you can use to help manage your money.
- Your Bank or Credit Union’s Tools – Whatever financial institution you use for your banking needs already has many tools available to you – be it a credit union, bank account, or other account that allows you to add and withdraw money easily without fees. Check them out because you never know what they offer. For example, some offer easy budgeting tools that allow you to set up and track your budget right inside your account. It’s good to have it all in one place like that.
- Financial Management Software – Cloud-based software in the form of mobile apps like Personal Capital and Mint.com will enable you to track and manage your finances easily by giving you access to all your accounts in one place. You can also use their financial advisers, get a personalized investment strategy, and more – even tax planning.
- App to Track Credit Card Awards – If you have credit cards, many of them come with awards. Most people never use their card benefits because they can’t keep track or are unaware of them. Check it out.
- Do Use Account Links – Your financial software often asks you to link up all your accounts. While this takes some time to set up, linking the accounts you use and tracking all the expenses and deposits in one place makes it easier to make decisions at a glance.
- Automate Tasks – Depending on your situation, there are many things you can automate. Set up automatic withdrawals for your savings and even bill payments. Automate all your bills to pay the right amount, on time, according to your pay schedule. You’ll avoid late fees and even avoid balances if you set up credit cards to pay the entire balance when it’s due.
- Set Up Electronic Reminders – You may not be able to automate some bills, but you can set up reminders for these so that you don’t forget. You can use apps on your smartphone, but you can also sync your phone and computer with Google Calendar with all your reminders. Some of your credit cards’ online systems even come with automation features and reminders.
Any automation and technology you choose will work for you if you use it and pay attention to it. It’s so much easier, for example, to set up automatic bill payment and investment payments so that you only deal each month with your flexible essential and non-essential expenditures, which means you have less to think about each month.