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How To Start Saving Money

By Edited Nov 13, 2013 1 2

Put Cash Away For A Rainy Day, Or Save For Something BIg

At some point, we all need to learn how to start saving money. Although it's really the most basic and fundamental of financial principles, few of us save as much as we ought to. The truth is, saving isn't taught in school, it's not taught in our culture, and it's becoming more rare that it's taught by our parents. We live in a society that values immediate satisfaction above long-term incremental growth. Why put $100 per week into a bank account when I could put it toward a new cell phone, or finance payments for new furniture? You get the point.

Learning how to save money in in this world requires that one be willing to go without some things. Whether you need some capital for a down payment for a house, want to buy a new car, or just want to have the security of knowing that you're not living paycheck to paycheck, you may have to give up some other less important things to reach your goals. 

Unless you make lots of cash, you will have to make sacrifices to put some away for a rainy day, or for long term growth. It may require that you give up some things that you love and too many of us just aren't willing to do that. Or maybe you have some spare cash and the issue is just simply that you don't know how to start saving money. Well here are some tips to get you started with your savings.

How To Start Saving Money

1. Figure out how much you can afford to save each month

This is the first and often most difficult step. You need to put together a budget and figure out how much cash you actually have and how much you spend. Hopefully at the end of that process you will find that there's a positive number. Once you have figured out what you need to survive, your savings will be the next amount that comes off. Budget for some savings before eating out, before cell phone expenses, before clothing and before any other extras. You need to save first. This is the difference between people who build substantial savings and people who never really get anywhere. Make your savings a priority before other things and it will grow.

2. Put the cash where it's difficult to get to it

There are tons of options for this and I recommend speaking to a financial advisor about your specific goals. It's important however, that you not have easy access to the money? Why is this you ask? Well since you need to know how to start saving money I will assume that you've never done it before. Once your savings grows to be a few thousand dollars it will be very tempting to spend it on something material that you want. A car, a big flat-screen television, you name it. They all start looking pretty good when you know you have money in the bank. Put it with a financial advisor or save it at a bank that's far from your house. However you do this, make sure it's as difficult to access as possible and never carry a debit card for this account.

3. Put extra in each month

Most banks now have programs that will automatically transfer a predetermined amount of money to a savings account each time you use your debit card. You also have the option to set up automatic transfers with online banking that will grow your nest egg even faster. If you're serious about learning how to start saving money, this tip will get you on your way fast. Put in a minimum amount each month that you have budgeted, and then set up a pre-authorized transfer to your savings every time you use your debit card. If your bank doesn't offer that service, log in to your online banking and just transfer a few bucks every couple of days. It's only a few bucks at a time but it makes a huge difference over the course of a year.

This tip is huge because you're not going to notice the money gone. In the same way that you stop for coffee or eat lunch out a few times per week. Maybe twice per week put an extra $5 into your savings. Doesn't sound like much but that's an extra $520 you could have saved in a year. It adds up. It may feel silly saving a few bucks at a time but believe me, it will be a large sum before you know it.

How to start saving money for your life depends on your specific financial situation. These tips are a great guideline however to getting you started and on the fast track to a solid chunk of savings. Start now and experience the security and freedom that comes with having some spare cash in the bank. Being broke sucks, today is the time to start doing something about it.


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Comments

Jan 3, 2013 2:25pm
Klaartje_Loose
I have 4 saving accounts, all for different purposes and I transfer money regularly, even the smallest numbers in a low month (I'm selfemployed) - it sure adds up!
Jan 3, 2013 2:27pm
migreig
We do something similar to that, it works well. Thanks for reading.
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