40% of Americans don’t have enough savings to cover a $400 emergency. They say that if they needed to cover that amount, they’d have to borrow the money or sell some belongings.
Not having savings for emergencies leads many people into more and more debt. But the solution is often about following money savings tips, not making more money.
Read on for 5 ways to save money faster that you can implement right now.
In This Post:
1. Set a Budget – and Stick to it
An essential part of learning how to save money fast is to create a budget that builds savings into it.
One of the best budgets out there is the ratio budget. This 50/30/20 budget is a great way to manage your money. It ensures that you allocate the right amount of your funds into the right categories.
To use this budget, you’ll allocate 50% of your income to your necessities, 30% to wants and 20% to savings.
This budget will help you learn to live on less and save for the important things.
2. Take Advantage of More Ways to Save Money
Besides the funds that you devote to savings each month, there are likely other ways that you can save money.
For example, your employer may match your retirement contributions in a plan such as a 401(k).
If you get a tax refund this year, don’t spend it all. Put a big chunk into your savings account. Same goes for any work bonuses, contest winnings or inheritance payments you get.
3. Spend Less Money
We live in a consumer society. We are constantly bombarded with messages to spend, spend, spend.
Even with a 30% cap on wants, you can reduce how much you spend on impulse or expensive items by training your mind to think about that item differently.
For example, think of the purchase as hours worked. If you are considering buying a $100 purse, how many hours of work is that for you?
If you make $20 an hour, that’s 5 hours of work. Is that item really worth 5 long hours of work?
You can also apply the 24-hour rule. Any time you are thinking of buying something that isn’t a necessity, wait 24 hours.
The next day, you may find you re-thought the purchase or can do without it for a while.
4. Trim the Excess out of Your Budget
Other ways to save money include canceling subscription and packages you don’t use like magazines, gym, and cable. You should also see how you can get a better cell phone plan.
If you have pets, find ways to save money on their upkeep. You can often buy pet food and phytoplankton online for less.
Why not bring a lunch and coffee from home? Over a few months, those dollars really add up.
This can make a big difference in your monthly expenses.
5. Get Out of Debt Quickly
A big aspect of learning how to save money fast involves getting out of debt.
If you have debt, a chunk of your income goes towards paying interest each month. By paying off debt quicker, you save a lot of money by ridding yourself of interest payments.
And you can allocate the money you would have spent on debt-repayment towards savings.
A great way to get out of debt quickly is by using the debt snowball method.
Bottom Line on How to Save Money Faster
As you can see, learning how to save money faster takes consistency.
But, if you follow these money saving tips, you’ll soon find that you are earning interest instead of paying it.
Next, learn how to pay off your student loans fast.