Saving money is a difficult prospect, even in the most stable of times. During the pandemic – or any time of social unrest – saving money and thinking about the future can seem irrelevant or hopeless. Focusing on the future, however, can be a huge boost to your mental health – not to mention your future financial health – by helping you fixate on a longterm goal.
The very act of saving requires you to deprive yourself of something immediately with the understanding that you’ll have something better down the line. Whether savings help you plan a vacation, get a new car, move across town, or live during lean times, putting some cash away now is a great idea.
How to Start Your Money Saving Plan
Where do you start saving money, though, especially when money is tight? Let’s take a look at some real-life ways you can start saving money right now, even during the quarantine.
Figure out your budget
The first thing you need to do is establish a budget, and if you don’t have one, start right this moment. Personally I love using Microsoft Excel to create a budget! If you don’t have Excel, you can do it manually, or you can download OpenOffice for free (this is not a sponsored post for OpenOffice, FYI – it’s just a free open-source office/productivity program).
Once you have your budget established, you can see where your money goes each month and where it comes from. When you see your revenue streams, it’s much easier to determine what you can cut or cut down to free up some cash for saving.
Change your mindset
I’m not going to tell you to stop buying $5 lattes every day, the way more savings blogs start. Chances are good, you either don’t buy $5 lattes every day, or you know you should stop if you do. The reality is that saving money is like taking the time to go to the gym; you have to make it before you take it. If you don’t carve out time to go to the gym/designate money for saving, you won’t do either.
So you might look at your budget and say “there’s just no room this month to save anything”, but the reality is that you probably have cash flow someplace that you can utilize. Find where your biggest variable source of money spending is, and get it in check. For us, it has always been eating at restaurants. When we realized just how much we were spending, we cut it way back and saved a lot of money each month.
Essentially, put it into your budget to save some cash each paycheck, and make your budget work around it. Trust me, it’s more than doable.
Learn to love planning
After you’ve made a budget and you can see where your money comes from and goes, you can better plan your spending. Go through your budget and eliminate everything you don’t need or use.
For instance, we had subscribed to HBO for Game of Thrones, but we forgot to unsubscribe when it was over. We paid for HBO for at least 6 months and barely used it when we absolutely didn’t have to. Planning your spending makes paying money for pointless or wasteful things harder because you need to justify to yourself why you’re spending that money.
Start by being deliberate about your grocery shopping by creating a meal plan. This process allows you to see how much money you’ll need to spend to keep your family fed and happy. It might take a few weeks to dial in just how much you need to spend, but meal planning helps cut down on wasted expenditure and food. This is because a good, solid meal plan has your nightly dinners blending into one another.
What I mean is that if you make a pork roast one night, you can use the leftover meat for pulled pork sandwiches the next. By transforming leftovers, you have delicious meals every day, and you don’t waste anything. This saves you money without making you feel deprived of yummy meals.
Add in some additional income streams
I have plenty of resources for finding side gigs, hustles, and passive income on the blog, and I suggest using them. Even if you only make $10 extra per month doing surveys on Survey Savvy, that’s money you can put into your savings account with zero guilt.
It might be easier to earn extra money and say “this is only for saving”. Still factor it into your budget, but make sure you earmark that it’s going right into your savings account.
The more you use and get used to these additional income streams, the better your money-making potential becomes. Start now, pick a few ideas that you like, and then follow-through on utilizing them daily. You’ll be surprised at much extra money you can make with a few apps or side gigs per month.
It’s time to start saving
Once you have your budget in place, your wasteful spending stopped, and some additional income streams established, now you can start saving money.
First, you’ll want to determine how much you want to save each month. Next, you’ll need to open a savings account, which is super easy due to the constant presence of online banking. Marcus by Goldman Sachs is a savings option that pays 1% interest, which is considerably higher than most banks. It’s particularly remarkable because most high-yield (yes, 1% is considered high-yield) require a significant deposit (in the $1000s of dollars). The Marcus account doesn’t have any minimum, so it’s a good choice.
You can also take a look at local credit unions – these often offer incentives for opening a savings account, like a deposit-matching program. One of our local banks offers up to $250 when you deposit a certain amount and leave it in there for at least 4 months. Looking for monetary incentive programs like this can add quickly to your little nest egg.
Once you have your account established, you should use a savings calculator to determine A) what you’re saving for, which will tell you how much you need, and B) how soon you’ll reach your goal.
Using the calculator I found on Pigly.com, I determined that with a $0 initial investment, along with the 1% interest rate provided by the Marcus savings account, a $25/month investment will turn into $1500 saved for 5 years. That’s a lot of money for very little investment each month. The calculator also tells you how much taxes will take out and how much inflation impacts your investment; it’s a great tool for determining how your savings will grow.
Jump right in!
You can sit down right now and take control of your financial future, even if it’s in a very small way. As you can see, with proper budgeting and planning, a meager investment of $25 a month can turn into a nice little $1500 nest egg 5 years down the line.
It doesn’t matter if you make minimum wage, live in a mansion, or somewhere in between, having a budget and a savings plan is essential to attaining financial freedom.
Grab some spreadsheet software, plan your meals, trim your wasteful costs, open a savings account, and establish a strategy with a savings calculator. Once you start saving and see your money growing, the impulse to spend wastefully will diminish, and you’ll be able to reap the rewards of planned financial spending when things return to normal.