Have you made a New Year’s Resolution to save money? Congratulations! Establishing an emergency fund is a major step toward financial responsibility. Without an emergency fund an unexpected major expense, illness, or job loss can have financially devastating results.
As with any New Year’s Resolution, though, it’s often difficult to stick with a decision to save money after the initial excitement has worn off. Maybe you clipped coupons for a few days but found it challenging to turn them into actual savings at the store.
Perhaps you decluttered your home and sold a few things but haven’t yet reached your savings goal. And, let’s face it, that takes even longer than clipping coupons!
Here’s how to save $1,000 in 6 months without doing the whole coupon and Craigslist thing.
Don’t think about what you’re giving up.
Anyone who has ever been on a diet can tell you that you never think about food as much as when you’re trying to eat less of it. The same goes with spending money. If you focus on what you’re giving up, you’ll wind up feeling deprived.
Know what happens to dieters who feel deprived? They go off their diet and eat ravenously. The same is true with saving money. If you think about things that are outside of your budget you’ll wind up convincing yourself after a week or two that you should treat yo’self — and that only puts your savings goal even farther away.
Focus on what you’re giving yourself: financial security.
Sure a savings account of $1,000 doesn’t mean you’re set for life, but it does mean a flat tire or flu won’t make you choose between eating dinner and paying the electric bill.
Knowing you can handle unplanned expenses also saves you from the financial desperation mindset that makes sketchy deals look like great ones and prevents people from making rational plans for their future.
Take yourself out of the picture.
One of the main reasons people find it difficult to set aside money is because, looking at their bank balance, they can’t imagine where they’ll find any money to set aside.
The trick is: don’t think about it.
Don’t try to find extra money in your paycheck.
Don’t hope that expenses this month will magically go down so you have a little leftover to put into savings.
Just do it.
Put your savings FIRST!
- Set up a dedicated savings account for your emergency fund.
- Schedule an automatic transfer of $85 every 2 weeks from your paycheck to this savings account.
- Forget about that money.
- In 6 months, you’ll have $1,020 saved.
Stretch what’s left to cover your expenses.
With automatic deposits into your savings account, you’ll have less in your checking account to spend each month. There’s just no way around it. That doesn’t have to keep you from making ends meet, though.
Most of us have some expenses we’re sure are non-discretionary but which really aren’t. A little ingenuity in handling them can translate into lower monthly spending, with the result that we’re still comfortable and we’re building our savings.
Find out which day of the week gas is cheapest in your state and fill up on that day.
Group your errands so you run them all on one day, in a loop that leads back to your house, rather than making multiple trips.
Reduce or eliminate your cable plan. I ditched our $110/mo. DirecTV play for a $29.99 PlayStation Vue account and get the same channels for $80 less per month!
Borrow books — even ebooks — along with DVDs and video games from your local library rather than buying or renting them.
Entertain at home. Throw a potluck, have a homemade pizza and movie (borrowed from the library) night, or go all retro and play board games or Bridge. Hanging out with friends doesn’t have to mean a restaurant dinner and cocktails.
Cancel every subscription you’re not actively using. Unread newspapers or magazines piling up? Cancel them. That monthly beauty box subscription which sends samples you don’t particularly like? Cancel it. Do you really need Hulu+ and Amazon Prime and Netflix? Figure out which one you watch most and cancel the others.
Stop buying bottled water. Get a water-filtering pitcher and reusable bottles — they’ll pay for themselves in the first month.
Buy generic, or shop at Aldi’s if there’s one near you. The price difference is mind-boggling.
Double up recipes and freeze the extras. It’s cheaper to cook in bulk and knowing you’ve got a meal ready to defrost and serve will help you resist dining out.
Stop paying $3-5 ATM service fees. Get cash back when you use your debit card shopping and you won’t pay an extra service fee.
Learn to color your own hair, give yourself a mani-pedi, even trim your bangs or ends. YouTube has a bazillion of great videos to show you how.
Speaking of YouTube — turn there for advice on home and car repairs before hiring an expensive handyman or mechanic. Last week I fixed my garbage disposal thanks to a one-minute video, saving myself over $100 by not calling a plumber. The month before that, a video showed me how to replace a passenger side mirror. I spent $80 on the part rather than paying a mechanic $300 plus parts!
Celebrate meeting your goal…then do it again.
Once you have that first $1,000 in savings then it’s time to treat yo’self — but don’t go crazy. A nice dinner out, a day at the amusement park, or even a purchase of something for your home — all are great ways to reward yourself.
And then? Then get back into the savings mindset. Go for another $1,000 or, better yet, a 3-month and then 6-month cushion.
Yes, it means cutting back your day-to-day spending a bit longer, but the result — knowing that you’re prepared for any expense life throws your way — is worth it!
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