How to Save Money
Saving money can help you achieve your short-term and long-term financial goals, from going on vacation, to buying a house or retiring someday. Read on to learn how saving money works, how much you should save, and some ways to start saving.
How saving money works
Saving money involves setting aside funds that you can access later on to pay for short-term and long-term financial goals or cover an emergency expense. Some financial goals you may have include buying a car, buying a house, retiring early, and paying for your child’s education. By saving up money over time, you’ll be able to work toward those goals and create a financial safety net so that you can handle whatever life throws your way.
How much money should I save?
The amount of money you should save depends on your financial situation and long-term plan. A general rule of thumb is to save at least three to six months’ worth of expenses. This may seem like a difficult amount to save, but don’t worry. You can always start by putting aside a little extra money into your savings account each week or month, and gradually increasing that amount. Saving money consistently and increasing how much you set aside may help you reach your savings goals faster than you think.
Easy ways to save money
Here are some ways you can save money fast:
Track your expenses to save money
Look at your monthly bill statements to get an idea of where you’re spending money and could be saving. Then, determine if you can cut some of these costs and put that extra money toward your savings. You may find that you don’t need to pay for cable or order takeout every week.
Make a budget to save money
A budget is a great way to keep track of your spending and contribute more money to your savings account. With the zero-sum budget, you can choose a “job” for every dollar of your monthly after-tax income. This is one of the easiest ways to save money because it can force you to treat your savings just like your expenses.
Another option is the pay yourself first budget, which involves putting a percentage of your income towards your savings every time you get paid. This method can allow you to prioritize your savings efforts.
Pay down your debt to save money
Once you get rid of debt, you’ll have more money to allocate toward savings. The debt snowball method is a smart strategy for saving money if you’d like to stay motivated throughout your debt-free journey.
To use the debt snowball method, make a list of all your debts. Then, pay off your smallest debts first. Next, roll the amount you used to pay those first debts into paying off your larger ones. Continue this process until all your debts are gone.
Set short-term and long-term savings goals to save money
Think about your short-term and long-term savings goals. If you’d like to go on vacation in the next six months, figure out how much money you’ll need to save.
If you want to prioritize paying for your child’s college in the next 10 years, do the math to figure out how much money it’ll cost. These goals can inspire you to start and continue the savings process of saving money.
Eliminate unnecessary expenses to save money
You may be spending money on things that you don’t need or want. If you pay for a monthly gym membership but never use it, for example, get rid of this expense. This way you can use the extra money for your savings.
Other types of unnecessary expenses you may want to eliminate so you can save more money include cable, daily coffee runs, and impulse online purchases.
Increase your income to save money
The more money you earn, the more you’ll have to contribute toward your savings. If your full-time job doesn’t pay enough for you to meet your savings goals, increase your income.
Sell items online on places like Facebook Marketplace or pick up a side job where you drive for a ride-share company or deliver food. You can put a portion or all of the extra money you earn in your savings account.
Why saving money is important
A financial emergency is bound to happen at some point in time. With a substantial savings account, you can cover a car repair, medical bill, or any other unexpected expense that comes your way. Savings can also help you pay for necessities like a car or house, or extras such as a vacation or a new appliance.
When should I start to save money?
You should start saving money as soon as possible. By starting now, you’ll be able to reach your short-term and long-term financial goals sooner and have a safety net in case you find yourself in an unexpected financial situation. Even if you can only save a few dollars a month, this money will add up over time and can make a big difference when you need it down the line.
Why should I start saving money early?
There are a few reasons you should start saving money early. By doing so, you can take advantage of the power of compound interest. This is when you earn interest on interest and grow your hard-earned savings over time.
Compound interest is particularly important if you want to retire or pay for all or some of your children’s college. Saving money early can also ensure you’re prepared for unexpected financial roadblocks. If your car breaks down or you lose a job, for example, a savings account can get you through the difficult time.
What should I save up money for?
Your unique situation will determine what you should save your money for. However, you should consider saving for the following:
If you don’t want to work forever, saving money may allow you to retire someday. You can save for retirement through a traditional or solo 401(k) plan, depending on your employment situation. You may also build your nest egg with a traditional or Roth IRA.
Paying off debt
By paying off debt as soon as possible, you can save on interest, improve your credit score, and relieve financial stress. The more money you save, the more you’ll have to put toward your debt, like student loans, car loans, and personal loans.
Homeownership is a dream for many Americans. To turn it into a reality, you’ll need to save for a down payment, which is usually the percentage of the home cost and depends on the mortgage program. You may also need to save for closing costs as well as home maintenance and repairs.
If you save for a car down payment, you’ll be able to reduce the overall amount you have to borrow. This can put you in a stronger position at the dealership and potentially save you thousands upon thousands of dollars in interest. It’s also a good idea to save for car-related repairs that may pop up when you least expect them.
Since the cost of college continues to rise, you may want to save for your children’s college education. Ideally, you’d do so while they’re still young so that your money has time to grow and turn into a sizable amount for tuition, books, and other related expenses. To save for college, you can open a 529 plan or the Coverdell Education Savings Account.
What to do if you don’t have enough money saved up
If you don’t have enough money saved up, don’t worry. Advance America offers a variety of loans you can use to meet your financial goals. These include payday loans, installment loans, title loans, and lines of credit. You may apply online and get your money quickly, sometimes within 24 hours. Visit Advance America today to learn more about the loans we offer.
4 types of loans to get if you don’t have money saved up
If you don’t have enough funds saved up for emergency or essential expenses and need money now, here are some loans you can consider:
With payday loans, you can receive a few hundred dollars to cover expenses before your next payday. These short-term, small dollar loans are meant to give you extra funds to last two to four weeks, until you receive your next paycheck. Once your loan is due, you’ll repay the full amount plus interest. This loan can be a great option if you don't have enough money saved up to hold you over until payday.
Installments loans are short-term loans that give you a lump sum of money upfront. You can then pay off this loan over time in fixed monthly payments, or installments. These loans can help if you don’t have money saved up and need to fund an expense like a home improvement project or medical bill.
Title loans are secured loans that let you use your car as collateral. The lender will offer a loan amount worth 25 to 50% of your car’s appraised value. Then, they’ll hold onto your title, and you can keep driving your car as you repay the loan.
Lines of credit
A line of credit is a flexible loan that lets you borrow as much or as little money as you need, up to your set credit limit. You can pay back this loan all at once or over time, and will only pay interest on the amount you borrow.
Get money right away
If you have an immediate expense but don’t have enough money saved up, don’t worry. Advance America offers a variety of online loans that can get you fast cash. You can count on us for payday loans, installment loans, title loans, and more. And best of all, you don’t need good credit and can apply from the comfort of your own home.