7 Steps To Smarter Saving | Reach Your Savings Goal | Your Money Handbook

Seven Steps to Smarter Saving

In theory, saving money is easy: simply squirrel away more of it than you spend.

In actuality, it’s hard—it’s really hard. And it’s even harder for millennials, who are not-so-secretly stuck in higher education debt and lower employment rates than the generation that raised them. Millennials have sky-high rents to pay, loans to make disappear, and food to eat.

And while people may joke that avocado toast is to blame for it all, there is a (sprouted) grain of truth to be found: we’re spending a lot of money on things we don’t need, often with a single swipe. So, how do we save?

While there are lots of little things you can do to cut costs—like wearing an extra layer in the winter instead of cranking up the heat or hosting friends for a potluck brunch instead of going out—it’s easy to feel overwhelmed by exactly where to start. Today, we’re giving you seven easy tips that’ll make a big-time difference—and help you reach your savings goals.

Evaluate you statement

As it happens, refusing to look at your current spending doesn’t make your current situation any better—it makes it worse. Take a both-eyes-open look at your latest statement and scan it for two of the most common savings-sucking culprits: daily indulgences and forgotten recurring payments.

A $10 lunch out every workday will cost you $2,600 over the course of a year. Cutting it down to once a week means you’ll have enough leftover lunch money to fund a European getaway—or, even better, pay off any debt. A seemingly innocent morning latte will put you back over $1,000 annually. That workout app you optimistically downloaded last January and then deleted because your phone’s storage was full? You never canceled your subscription, and now you’re down another $200.

A $10 lunch out every workday will cost you $2,600 over the course of a year.

Indulging every once in awhile isn’t bad. Indulging always, however, is harming your financial health. Trim the fat, and save more over time.

Shop smarter, not cheeper

It turns out that spending money on a pair of shoes you don’t love, but hey, they’re cheap!, isn’t actually a wise investment—it’s an impulsive one. Purchasing something that’s a good deal just because it’s affordable is costing you more in the long run—it’s also the first step to a closet or pantry filled with, well, junk you’ll almost certainly never use.

From capsule wardrobes to the KonMari Method, minimalist trends abound—and for good reason. As Marie Kondo says, you should keep—or in this case, purchase—only those things that speak to your heart or that serve a specific purpose. If the thing happens to be on sale, secondhand, or generic-brand, even better.

The next time you think, “Oh, this [insert unnecessary item here] is only $8, I could use that for [insert unnecessary purpose here],” rationalize yourself right out of that and save the $8. It’ll quickly pay off—we promise. On the other hand, if you do need something, go for the most cost-effective option. There’s a good chance you won’t be able to tell the difference between a generic pancake mix and the fancy kind, so save yourself the dollar or two.

Where banking benefits education.

Sell your old stuff

Back to capsule wardrobes and Marie Kondo for just a minute: decluttering isn’t only incredibly cathartic, but it has cash benefits. Resale retailers like Buffalo Exchange and thredUP will purchase your gently used clothing and donate the rest. Craigslist and OfferUp are great resources for selling retired electronics and furniture. Take inventory, ask yourself if you really love or need it—and answer honestly—then enjoy the bonus money that took practically no effort to earn.

Track your spending and stick to a list—or try the cash diet

When people turn to experts for weight loss advice, the expert will almost always suggest keeping a food journal. Writing down everything you eat not only raises your awareness (turns out you’ve been mindlessly eating 100 calories every time you grab a handful of trail mix), but it holds you accountable. Over time, you’ll curb the snacking and won’t need to keep the food journal.

Managing your money is no different. Write down everything you purchase in a day, and you’ll notice the extra little things here and there that add up. Stick to a list, and don’t stray (we will defeat you, Target).

Or, try the cash diet. Look at your monthly expenses—rent, bills, debts, savings, etc.—and identify how much you have left over. Let’s say you have $1,000 a month. Divide that over four weeks, then only take out $250 each week for all your daily expenses. You’ll likely be surprised by how quickly it goes, and more apt to think twice before making a purchase. It’s amazing what a little awareness can do.

Conversely...

Use your credit card—but pay it off

Credit cards are both a blessing and a curse. If you don’t abuse the privilege that is a credit card, you can rack up points or earn cash back just for using it. Paying it off on time will spare you late payment fees and interest while upping your credit score. On the flip side, a credit card is the easiest way to spend with abandon. If you’re in the red or have a tendency to live far beyond your means, give the credit card a rest and pay off that debt.

Keep the bulk of your money in savings—and name your account

If you’re able, keep as much of your wealth as possible in your savings account versus your checking account. There, it’ll earn interest, and even if it’s nominal, it’ll make a difference over time. At the very least, it’ll help you make it a habit. And there are great options, including certificates, if you’re able to secure your money in an account for a longer term to take advantage of better rates on your savings.

Then, name your savings account. There’s a reason stories stick more than stats do—a character with a goal and an obstacle is relatable. A number is not. Change your savings account from “#123456” to “Italy Vacation!” or “Way Overdue New Car,” and you’ll remember your own goals every time you overcome your own obstacle: unnecessary spending.

Hang in there

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