Tips for How to Save Money
If you find yourself struggling to save money at the end of the month, consider these 4 tips as a way to help turn that around.
1. Pay Yourself First - Once the money is in your bank account, there's a really good chance you'll use it for something other than retirement savings. Don't give yourself the chance to be tempted to spend it. Instead set up an automatic savings into your 401(k) or another type of retirement savings account. If your starting from zero, consider setting up a small percentage at first and gradually increasing it every 6 months. I find that even if a contribution seems to make the budget tight at first, people will acclimate and after some time will work up to the appropriate savings goal.
2. Use Extra Caution on the Big Purchases - One of the surest ways to get off track in the savings department is by overreaching on the bigger purchases. If you're behind on your investment goals, start with looking at your car and house payment. Getting in over your head on a pricey house or car can be a major pitfall that is difficult to recover from. Don't let lifestyle creep set in and make you think you need more than you can afford because of what everyone else would think.
3. Forget the Credit Cards - As your career develops and you start making more money, your credit card balances should go down, right? Unfortunately, the exact opposite happens. The average american under 35 has $5,808 in credit card debt and for those 35-44, the number jumps to $8,235. It's difficult to increase your 401(k) savings when you are dealing with that type of debt. The best thing you can do is reduce the temptation by eliminating the credit cards. Paying for things in cash is much more painful than using the plastic. It will cause you to think twice about how much you need that next purchase.
4. Track Your Expenses - This is something we talk about a lot at Peak. Simply write down every purchase you make or bill you pay. Actually seeing it on paper or in a spreadsheet will help you identify many of the problem areas. If you identify areas of cost savings, immediately turn that cost savings into automatic savings. There are many different websites or apps designed to track costs or keep a budget. However, you can keep it simple and simply use an excel sheet. We have created a generic one that you can customize to make it your own. It is attached below or can be found on our website here: peakwm.com/expenses