About a month ago, Jake and I decided that 2018 was year we wanted to become debt-free. Our finances aren’t the worst nor are we are struggling, but there’s still room for improvement. Since making this decision, I’ve been into watching YouTubers that live as close to debt-free as possible, finding new money saving tips, and starting to live clutter-free as well.
It’s my personal goal to payoff my student loans by the time I’m 30 years old. That gives me about a year a half, and I’m fairly confident that with the proper budgeting I can do it. My reason for this is to be in a good position for future, larger purchases in the near future. I’m thinking along the lines of a house, a new car, or even a larger travel expense such as Australia and New Zealand.
Now just because I’m working on paying down my debt and saving money, doesn’t mean that I’m restricting myself from being social or going out to eat every once in a while. There’s plenty of free or close to free activities that we can do, such as walking a the lake, discount movie theaters, or staying in and cooking a meal. I also think it’s appropriate to celebrate milestones or achievements and don’t mind spending the money in those cases.
Now, I’m not financial adviser or a professional, so as a disclosure please take my recommendations lightly and seek out professional advice if you think you need it. Everyone’s situations are going to be different. That being said, here are my top five tips to start saving money:
1. Look at your current financial situation.
As painful as it can be to look at how much money you’re spending, you need to do it. Log into your bank account, export your purchases from the past few months, and look at where you’re spending money. I did this a few months ago and couldn’t believe how much money I was spending on multiple grocery store strips during the week. Amazon purchases. Frivolous spending at random stores.
Now open an Excel or Google sheet and add all your bills and monthly expenses, and compare it to your income. Are you living within your means? Are you breaking even, spending more or less than your income? If you’re spending less, are you saving the extra money? These are all questions you should ask yourself and sort out as part of your finances.
2. Make a grocery list.
Before you run to the grocery store for your weekly food haul, sit down and create a list of only the foods that you need. If there are a few items you want for a treat day or a sweet tooth go for it. That being said, really take into consideration the foods you need in order to make your meals for the week and stick to only those foods. If you’re also able to make a meal plan, I recommend doing so to both stay on track with your budget and your fitness goals. If possible, shop at a lower cost grocery store such as Aldi, Walmart, or something local and buy in bulk at Costco or Sam Club (or something similar).
3. Save money in different accounts.
Without going too far into this, I would first make sure that you’re putting money away into a savings account – plain and simple. Start by adding $50 direct deposit from your paycheck – no matter how much you’re making – into your savings account so you never even see it. If you have the option to save money for a 401K, I would recommend looking into that as well through a financial adviser.
Depending on your personal goals, the next account I recommend saving money to is a rent account. For this, you can set up a transfer from your checking account to the rent account on the day you get paid for half the amount of your rent. I started this process years ago before I had even moved out of my dad’s house, and did this for four months before apartment searching. By the time I moved into my apartment, I was able to pay my rent on time without the stress of worrying if I would have the funds. And I still had money for groceries. This may be applicable for your mortgage payment, if you own rather than rent.
The next saving account you may choose to setup will vary on your goals. In addition to my savings and rent, I also have a travel account that I transfer money to each paycheck. If for some reason I can’t “afford” to transfer the money during one pay period, I simply move the money back for my living expenses. Traveling is important to me and having this extra “fun money” set aside for when I book a trip is well worth it.
4. Drink coffee at work.
If you’re like me and you go into an office for work during the week, then I’m guessing coffee is one of the benefits you get. I came to the realization that instead of having one cup of coffee at home right when I wake up and another at work, I could drink my two cups of coffee at my desk instead. This not only saves me some money on coffee, but also on creamer, almond milk, and whipped cream (which I tend to buy as a topper for my coffee).
5. Think on it before you buy it.
If you’ve ever gone into Target to buy three things and you leave with four bags and you’re a $100 (or more) down, this is where you need to dial it back. Do you really need to buy another eye shadow palette for your collection? (This is a question I ask myself every week). Is it within your budget to buy new pieces for your closet just because the seasons are changing? Being on a budget and saving money doesn’t mean you can’t buy anything for yourself ever. But you should carefully consider, research, and really think about your purchase before going through with it. Give it a few days (at least) or even months until making your decision.