Saving money is the first real step to financial independence and success. The issue is that so many people don’t have the knowledge of how to start saving and the best places to get it going.
There are hundreds of places to keep your money and without financial education, a lot of people end up leaving their money in a 1% interest bank account and make no progress.
The first step in saving money is understanding your why. What are you working towards? Are you saving money for a downpayment on your dream home? Are you saving money just to have a surplus for peace of mind?
Whatever your why, saving is a great idea and a great place to start. Saving money is going to put you into a better financial place no matter what the reason.
If you really want to start saving money, you should definitely save this article for later on Pinterest!
Table of Contents
When To Start Saving
Obviously, the easy answer here is to start now. Like actually, stop reading this and start saving. Just kidding, please finish reading this, I think you need it.
You should definitely start saving as soon as possible if you have monetary goals that you want to work towards. However, if you have huge amounts of debt like student loans (ugh) I honestly suggest that you start paying that off before you save a lot of money first.
If you need help trying to pay off your debt, I highly suggest you read: 10 Things To Do BEFORE You Pay Off Debt!
Even if you’re only saving a few dollars a day or even a few dollars a month, it’s way better than waiting a few years and hoping that it ends up going well! Starting early will never be a mistake.
Things To Save For
We all have different reasons to start saving money, but all of them are valid. However, there are a few specific places where you should save money that will benefit you no matter what!
1. Emergency Fund
I don’t know how many times I’ve stressed the importance of an emergency fund, but it isn’t going to end here! An emergency fund is the single most important thing you can have in your financial setup.
So, what is an emergency fund?
An emergency fund is a specific bank account that’s used at any time where you need money quickly for something that you could not have planned for. It could be used when you lose a job, when you end up in a hospital, or when your roof caves in from a crazy storm that your insurance won’t cover.
A fully funded emergency fund will contain 3-6 months of your household expenses to cover just about anything that can be thrown at you.
I’m so passionate about the importance of emergency funds, that I wrote an entire post on how to start a $1000 starter emergency fund.
2. Sinking Funds
Sinking funds are a really valuable financial tool that not a lot of people seem to even know about. A sinking fund is essentially a nice pile of money that you choose to save up with one very specific purpose in mind.
A great example of a sinking fund that a lot of people seem to understand, is a holiday savings sinking fund. Imagine putting away $100 a month for holiday spending and having $1200 to cover the month of December instead of putting all your holiday spending on a credit card!
Sinking funds are valuable because they allow you to be proactive with your finances and make plans instead of being reactive and just trying to fix problems after they pop up.
You can learn more about sinking funds in this article: Beginner’s Guide to Sinking Funds.
3. Retirement Savings
Most people in their 20s haven’t even thought about starting to save for retirement, and they won’t until they’re at least 30. The sad thing is, you’re leaving thousands of dollars on the table by waiting because of the power of compound interest (basically, you earn interest on the interest you’ve earned and it grows quickly).
If you don’t have a ton of money to save each month, retirement should be on of the first things you decide to do because you’ll appreciate it in the future. Especially valuable if you can take advantage of an employer match program for a 401(k)!
4. Travel Savings
It’s a horrible fact but most people in their 20s and 30s have a bad habit of charging their vacations onto a credit card and worrying about it later. A vacation that originally would’ve cost $2,000 ends up costing almost 50% more by the time they’ve paid if off.
The crazy thing is people plan vacations usually at least a year in advance but they still charge them to credit cards and don’t have them paid off by the time they leave. I’m a firm believer that if you can’t afford to pay cash for a vacation, then you can’t afford the vacation.
That’s why travel savings is a big deal, if you want to go on a trip somewhere tropical or a cool foreign city, you should start saving way earlier than you think!
5. Education
It seems like the world is experiencing a crazy student loan situation that’s never been seen before. We have 18-year-olds being trusted with the decision to go into thousands of dollars of debt without ever being taught how the loans even work!
If you plan to go back to school, or have children who you plan to pay for college for, you should start saving for it as soon as possible. Graduating debt free is a dream for many, but could be a reality for you and your family members!
If you want to learn more about graduating debt free, you can read this article: How to Graduate Debt Free ~ 6 Easy Steps
6. Downpayments
There should never be a time in your life where you’re planning on buying a house or a brand new car without planning for it first. These are huge life-altering purchases and you should be saving money for at least a few months before you make them.
If you have it in your 5-year plan that you want to purchase a new home or a new car, you should start saving up for it well in advance so you aren’t scrambling to make payments when you finally find your dream home.
How To Start Saving Money
1. Pay Yourself First
The reason that so many people fail to save money is that they pay everybody else before they pay themselves. Have you ever been in a position where you pay all of your bills, go shopping, and then you think “oh, I should save some money!” but there’s nothing left?
Every single day we pay everybody else before we pay ourselves. If you start paying yourself first and putting 10% off the top of your paycheck into savings you won’t really miss the money.
Let’s go into an example of doing this. Let’s say you’re making a monthly salary of $4,000. You take 10% of your weekly $1000 and throw it right into a savings account for your emergency fund. This means you still have $900 a week or $3,600 a month to play with and you can easily live off that much money. This means you’ll have a savings account with $5,200 in the account by the end of the year and that’s crazy progress without even trying.
You can also use apps like Acorns to jump start your savings as well, it’s an investing app that connects to your bank account and invests your spare change. This may not sound like much but it can add up really quick! Give acorns a try for free and get a $5 welcome bonus!
2. Start a Budget
I know that for most people having a budget is an absolute nightmare. Budgets aren’t fun, but they can allow you to do everything you’ve ever wanted to do and more.
Having a budget allows you to make a plan for every single dollar and that makes sure that you’re money is working for you instead of you only working for your money.
If you’ve never had a budget before, I highly suggest that you try out the Zero-Based Budgeting Method because it’s insanely straightforward and won’t make things extremely complicated.
3. Use a No-Fee Bank Account
A really simple way to save money every month is to make sure you’re using a no-fee bank account. Why let banks get more money while you struggle to even pay for gas?
There are tons of new no-fee bank accounts that are popping up all around, and I’ve signed up for one and would never go back. I love saving $15 a month just by going to a bank that has my best interests at heart.
If you happen to be a fellow Canadian, I highly suggest using the no-fee bank Tangerine. Plus, if you use my orange code 50681730S1 when you sign up, you’ll get $50 for free when you deposit your first $100. Free money AND no bank fees!
4. Set up Automatic Bill Payments
A great way to throw away money is missing payments and being forced to pay late fees and additional interest. This is why all my payments are set up to be automatically paid so I never miss a payment.
Pretty much every bank has a mobile app and website these days and all of them have the capabilities to set up automatic payments so it’s as easy as pie!
5. Use Paribus for Price Adjustments
Have you ever bought something you really wanted online and a few days later you discover that the price had dropped like $10 and you’re bummed out? Well, this happens to me all the time.
There’s an app for that, thank goodness. It’s called Paribus and it’s seriously an amazing service. They monitor your receipts and let you know if there’s been a price drop and will even get you the price adjustment refund. Sounds too good to be true, eh?
Sign up for Paribus for FREE and start getting that money back!
6. Get Cashback
It seems like most shopping is done online these days, so why not get cash back when buying the things you need! My favourite way to get cash back is to use Ebates. They have websites like Amazon, Sephora, and so many more that I use every single month.
Last month Ebates sent me $70 through paypal from all the birthday gifts I needed to buy, it felt really good.
7. Think of Prices as Time Worked
One of the simplest tips I can give you for saving a TON of money is to think of the prices of things you want as hours worked. Let’s say you make $10 an hour and you want to buy a pair of $200 headphones.
That’s going to take you OVER 20 hours (including taxes) to pay for. I don’t know about you, but that’s a huge shock to my system and can stop me from pretty much buying anything.
Don’t just do this for big items either, even that $5 cup of coffee can be thought of this way. 30 minutes of work for a coffee? I don’t think so!
8. Track Your Expenses
If you really want to save big money, you have to know where the money you’re spending is going or else you won’t know where you can cut!
Tracking your expenses is an amazing way to see where you’re throwing money away, and where you could make small changes that could change things for you forever.
You can use the highlighter method to track your expenses!
9. Save for Something Specific
A big reason why so many of us fail to save money is because we aren’t saving for something in particular. It’s really hard to put money away for something if you don’t even know what it’s going to be used to.
This is why all of my saving accounts have a name and a purpose. I have an account called Emergency Fund, one called Europe 2020, and like 5 more. I’m a big saver.
Start saving for something in particular and you’ll see your savings account grow so much faster than if you are just saving for a rainy day.
Final Thoughts
Saving money really doesn’t need to be that hard, there are specific and simple ways to save money that can drastically change your financial health. Do you have any other tips for starting to save money? If so, leave them in the comments below so other people can enjoy them too!
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