How is it possible that some people always have money to spare, while others barely make ends meet? How can you save money when you don’t make that much?
A lot of people live paycheck to paycheck and this isn’t how you should live your life.
Make sure that you apply some or most of these habits and you will be able to save a lot more!
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1. Pay Yourself First
Save money by paying yourself first! When you get your paycheck, the first thing to do is make sure that you set aside some money to save for the long run. It is so important to pay yourself first because when you wait until the end of the month to see what is left, most of the time the money will have evaporated.
It’s much easier to make it a habit to pay yourself first, maybe even by using a function in your bank app that transfers it automatically to a savings account so you won’t even miss the money. If you operate like that, you will surely save more money than the other way around.
In the end, if you still need the money for some urgent or necessary stuff, you can always get it back from your bank account. You will be less tempted to spend the money you worked so hard for on unnecessary things you don’t love.
2. Budgeting to Save Money
I know budgeting can be a bore, but for me, I enjoy it! I can’t stop watching budgeting videos on Youtube so I think there is some fun in it.
Tracking your expenses helps you to figure out in what categories you spend a lot of money (or too much money). It also helps you to find out where you can cut costs so you will be able to save more.
Budgeting can be done in a classic notebook or Excel. I use a free Excel worksheet I found on a website that I will link here. I am using spreadsheet number 3 to have an overview of my year so that I can see at the end where all my money went and if there are opportunities to cut some spending.
Before that, I was using a paper notebook. I love writing in a planner so I still do that at the same time as tracking everything in Excel. First, I used a monthly overview but I do like the yearly overview because of the bigger picture.
There are plenty of cute budget planners on Amazon available to help you with your first steps. This Clever Fox Budget Planner is also adorable and handy at the same time! It is available in many different colors but I like the lavender one best.
You might also like: Budgeting Tips For Beginners: How to Start Budgeting
3. Live Below Your Means
It would be nice to have it all, but who really does? Lifestyle creep is something you should be aware of!
Most people think they don’t have enough money to save because they don’t earn enough. Well, in some cases, this might be true. But for most people, it will always be possible to save something. Save money by living below your means and trying to live a more frugal lifestyle.
Unfortunately, a lot of people start spending more when they start earning more, which leads to still living paycheck to paycheck! Say goodbye to financial freedom this way, because when you lose your job, there will be no money in your savings.
So if you live below your means, you can save money for so many things you want to have. I mean things like financial freedom, early retirement, a house to live in… And when your income grows but your expenses stay almost the same (or increase a little bit) then you can save more and more!
You might also like: How to Save More Money on Groceries: 15 Tips for Spending Less
4. Learn to Make Your Money Work for You
Have you ever heard of the world’s eighth wonder according to Albert Einstein?
Compound interest is the secret of getting rich. And how can you get this compound interest? By investing in the stock market over a long time period. This long period is very important! When you leave your money in the stock market for a long time, a snowball effect will occur. It is very helpful to start at a young age but later on, when you still have a few decades left, it is still possible for you as well!
Before you can start investing, you need to save money first!
I am not a financial expert but I really do believe in this theory and I started investing last summer. Of course, you should do some more financial research before you randomly start investing in things you don’t know anything about.
Starting today is better than waiting another year so go for it! Give your money a chance to grow!
5. Set Financial Goals
You need to have some financial goals to find the motivation to save money instead of spending it. Spending it is way more fun short term (I know) but saving up for bigger goals can be fun too!
Accomplishing your financial goals is always very fulfilling. Let’s say you want to buy a house, without saving money regularly, you won’t be able to buy one (ever).
I know the housing market these days is crazy and I am still saving a lot for a house myself but I do have a goal to buy one one day. I don’t know when but somewhere in my future there is a house for me! This will only be possible if I am disciplined enough to save some money every month.
Another goal for myself is financial independence. I am working hard in my day job but I don’t like relying on a single job, only 1 source of income to get me the freedom I want. Saving money will protect me if I would lose my job.
You can use sinking funds to contribute to your financial goals every month. If you want to learn what they are, you should check out my blog post on sinking funds.
6. Avoid Debt
If you want to save money, you should always avoid debt. Minimize the use of credit cards and loans. Loans can be a good thing for you personally, let’s say to be able to buy a house. But be careful about the interest rates! Right now is really not a good time to get a loan as the interest rates are skyrocketing at the moment!
Pay off high-interest debt as soon as possible to avoid accumulating unnecessary interest charges. When you are reducing debt, you are free to save more money.
Avoid consumer debt as well. Try not to go into debt for things like buying a phone or other smaller things. It will only cost you big time! This goes hand in hand with living below your means. If you can’t afford to buy a phone without a loan, maybe you should buy a cheaper one.
If you want to avoid going into debt in the first place, maybe start saving to fully fund an emergency fund! This way, when something unexpected happens (an emergency) where you need a lot of money, you will have some saved up!
7. Practice Mindful Spending
It’s all about setting priorities. As I said earlier, I don’t think you should want to have it all, but you should know what the things are that you value above everything else.
Make a difference between your wants and your needs. Needs are the things you can’t live without so you should pay for them. What you can do is figure out how the least possible for things like housing, food, transportation… Your wants are things that make you happy. Once in a while, you should be able to spend on things you truly enjoy. You can save money by only spending money on the things you really love.
There are also things you would like to have but that won’t bring you much joy so I suggest keeping them to a minimum. I will give you an example. I love coffee and cannot go a day without my cup of Joe. If I would go to Starbucks each day, my bank account would be robbed so I drink most of my coffee at work or at home. I still get a lot of pleasure from drinking it without paying so much for it. But once in a while, I can enjoy a fancy coffee in a coffee shop. Just not every day.
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Save money by following these tips!
There are so many ways to save money or a lot more than you are doing right now. Many of these are practical tips, but you have to change your mindset to make sure you can use them in your life.
In the end, the only way to financial freedom is to save more than you spend.
Which of these tips are you doing already or would you like to start doing in your life?
These habits are life changers so make sure to implement them into your life!