This is the blog post most of us hate. “You mean there is no magical website that just saves money for me?” I feel your pain.
Any business savvy person will tell you that a key rule to personal finance is, “Make a dollar, save a dime.” If you are saying to yourself right now, “But I don’t even make enough to pay my bills,” or “I am living pay check to pay check as it is,” the solution is simple… It’s time to cut expenses. The first way to cut expenses is to know what your expenses are.
1. Start by charting your expenses
You have to start somewhere. You should always have a clear picture of where your money goes. I recommend using Mint.com, Personal Capital, or an old fashion pen and paper. Whatever you are using to chart where your money is going monthly make sure you are tracking it diligently. Knowledge is power. Know where your money goes.
Once you know what your expenses are you can cut expenses you don’t need to start saving 10%-25% of your income monthly. Start small and then work your way up. You can even save 10% for long term and then 5%-15% towards an investment in an asset(ex: your first home).
2. Have separate accounts
If you can access your savings easily, what is going to keep you from using it to pay for that brand new car you want to buy? Having a separate savings account, with a different bank then where you’re checking and credit cards are often requires that you wait 2-3 business days before you can transfer money from one account to another. This requires you to step back and think before making a large purchase.
3. Be savvy with credit
Not everyone is cut out to have a credit card. Credit can be a great tool, but it can also be your greatest obstacle. If you are in credit debit, and paying high interest rates, start putting together a plan to pay off your credit cards now. A great method to help you is Dave Ramsey’s Snowball Method.
If you are paying off your credit card monthly, first of all kudos! Second, it’s time to leverage your credit card so you get some benefits. Start by researching up credit card reward programs and then find the reward program that fits your life style best.
If you like to travel, get a card with airline miles. If you have diverse interests, then look for a card with cash back so you can pay yourself back when you spend money. On the travel and lifestyle blog, The Points Guy the author breaks down the benefits of credit cards so you can find one that is best for you.
You have to start somewhere. Start taking some baby steps, so you can retire young, travel the world, by a home, or do whatever else makes you feel alive.