Simple steps to savings

How to save money even in the tightest budget

UPDATE: America Saves Week—which runs from Feb. 25 to March 1, 2013—is a great time to dedicate yourself to saving more money. This blog goes over some very simple steps that you can take to do so.

Trying to save money isn't easy, because, for most us, that money is already spoken for: a car payment, credit card payment, mortgage payment, utility payment, daycare payment, health insurance payment … and on and on. But here’s the thing: There is all kinds of extra money hiding there, even if your budget is tighter than two coats of paint.

You just have to know the steps it takes to find it.

Step one: Grab a bank statement. If you go through your account and start adding up things that aren’t essential (e.g., ignore your utility payment, car payment, etc.) you’ll be stunned—flabbergasted, even!—at what you find.

My wife and I did this last year and found that our twice-a-week fast food lunches were costing us nearly $1,500 a year! And our $30, once-a-week night out was adding up to about the same. We cut those in half and **POOF!!** an extra $1,500 appeared! And once we quit smoking, we’ll be saving another $6,000 a year (not to mention our health!).

Odds are that you have this kind of stuff in your spending, so find it and figure out how to redirect that money into savings.

Step two: Pay yourself first. Saving all of this money won’t mean much if you go out and spend it, and the idea here is to have some saved for when life happens—the brakes go out, the plumbing turns your kitchen into a wading pool, your kid accidently puts his new toy light saber through your very real TV …

That’s why it’s best to sock that money aside before you even see it via allotment or direct deposit, partially into a retirement account, and partially into an emergency savings account.  What I’ve learned from doing this myself is that, after a while, you won’t even know that money is gone.

Step three: Buy smart. Now that you’ve put that money aside, you’re going to need to change your spending habits. Making a must-follow grocery list, going to a different store with lower prices, even shopping around for car insurance are easy ways to do that.

Oh, and when you make a list, make sure to stick to it. (This is an issue I used to have when grocery shopping, as so much looked good at the time and … well, we’d wind up with a pantry full of stuff we never used. But by sticking to the list, we’ve saved at least $100 a month.)

Also: coupons. No, you probably won’t get three carts of stuff for $4.29 like the extreme couponers do on TV, but you can save $3, $5, even $10 per trip. That might not seem like much, but do the math: $5 per trip x 4 trips a month x 12 months a year = $240 a year. Not a fortune, but that’s real money you’re saving.

Step four: Be both patient and committed. The best part of all this is that it really doesn’t take much work. What it does take is time and the realization that all those little savings add up over time.

No, you won’t become a millionaire overnight—well, not unless you win the lottery. But, yes, you will be surprised how much extra money you really have, and be glad that it’s there when you need it.

Follow Mark Dye on Google+.

Mark Dye

About the author: Mark Dye

Mark Dye has been writing articles, recording podcasts, and putting together books on personal finance for nearly a decade. His work has been recognized by the American Bankers Association and the Institute for Financial Literacy, and received an 2011 APEX Grand Award for Writing. Follow Mark on Google+.

Contact: Mark Dye


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