Looking into the future, what would it look like if you were financially stable and not worrying about money? Would you feel better prepared and more independent? Would you feel you could weather some of the bad storms in your life? Do you think you would be able to achieve more of your goals? Would your life be less stressful? Does financial worry affect your mood, health and relationships?
Ways to Find Money
Saving money seems like an overwhelming task. Do you always feel like you don’t make enough money to save? If so, saving money can be a challenge. Consider these three ways to find money to save:
- Reduce spending by changing your spending habits and/or by redirecting money into savings.
- Increase your income by taking on a part time job or doing some odd jobs.
- Do some combination of both one and two.
Build an Emergency Fund
Building an “emergency fund” or a “life happens” fund is one of the most important steps you can take to building financial security. How does one go about finding money to save? Start by saving small amounts each time you get paid. The key is to get into the habit of saving regularly and automatically. Then the small amounts will begin to add up. Being able to see your savings grow is a strong motivator to save even more.
Track Your Spending
The most effective way to find money is by tracking your spending. Simply taking a look at where your money is going for several months, will enable you to see a trend in how you spend your money. You’ll be able to identify money (patterns) and make adjustments in your spending habits. Track your spending in the notes section on your phone or in a special (pocket size) notebook. Use whatever method works for you.
You can reduce spending by doing things a little differently. Small amounts of spending do add up over time. Try reducing or cutting out those small frequent purchases. For example, say you spend $1.00 per day in the vending machine at work. The math is easy to compute as saving one dollar a day for a year equals $365.00. After 5 years that is $1,826; after 10 years that is $3,652 and after 20 years that equals $7,305. Daily and weekly expenses can add up to hundreds or thousands of dollars per year. Now think about what you could do with this money if you had not spent it in the vending machine.
Save Automatically
The easiest way to save is automatically. Saving automatically means you set up a process to save at regular intervals. That can be savings on a daily, weekly or monthly basis. Saving automatically helps you not forget and use the money for other things. Here are a few savings tips:
- Every payday, have your bank or credit union transfer a fixed amount from one account to a savings or investment account at a certain time of the month.
- Participate in an employer sponsored retirement plan. Some employers have a benefit with some form of matching funds for retirement.
- Save loose change in a jar. That certainly adds up over time if you put all that loose change into a jar everyday and don’t spend it.
Reducing Debt
Reducing debt is also a way to save money. It will take planning, discipline and patience to reduce debt. Seeking financial counseling may help you understand how to properly manage your finances. Start by making a list of your debts, the amount and the interest rates for each. Work on paying down your higher interest debt first. Taking steps now will help you gain control of your financial situation. Check out PowerPay.org; a financial calculator program that can help you discover how much you can save by paying off debt and rolling payments to get out of debt faster.
Make a Plan for Becoming Financially Stable
Take action now and pledge to save money. Setting a specific savings goal with a dollar amount and writing it down is important. Research tells us that writing down goals makes them more likely to be achieved. This is because it helps you stay on track. Making a plan to save is the most important step you can take toward your financial future.
Live Smart Colorado feature articles, developed by Colorado State University Extension specialists, provide research-based, practical information to support lifelong nutrition, physical, financial, and emotional health and well-being for Coloradans.