Everyone wishes they could save more money. Yet many people fail to time after time again.
The best way to save money is to eliminate your money-wasting habits and replace them with money-saving habits. Though there are dozens of different ways to do this, there are a handful of methods that are time tested to work for the majority of people.
Simple as that.
Below we show you the absolute best way to save money, preceded by 3 other great money-saving tips.
Best Way To Save Money: Eliminate Debt
According to Value Penguin, the average American credit card debt is $5,700.
Worrying about your debt makes saving money hard. Unpaid debt means you must make the tough decision of how much money to put towards debt repayment and how much money to put into savings each month.
Our preferred method is to eliminate your debt first. Put all your extra money towards your credit card debt until it’s paid off.
The high-interest of these cards kills your wallet, and the psychological weight of knowing you owe money can be crushing.
Once it’s paid off, you can then stick the same amount you were using for monthly payments into your savings account.
Best Way to Continue Saving Money: Create Savings Goals
It’s difficult to save unless you have concrete savings goals in mind.
First is to visualize why you want to save in the first place. Is it to buy a new car? Put down 20 percent on a down payment? Be set to go in retirement?
Setting concrete goals helps you stay that much more motivated to save. It also helps you actually figure out how much to save each month.
Chase suggests writing down your target savings amount next to each of your savings goals for even more motivation.
Regions provide a useful savings calculator that can help you figure out the best way to meet your goals, no matter what they are.
Use a Budget Plan
There are pros and cons to using a budget plan. But when it comes to saving money, a budget plan is a huge help.
Gallup shows that only about 30% of Americans utilize a budget plan. Yet countless financial experts, including those at Duke University, insist that a budget plan is perhaps the best way to save money.
A budget plan simply dictates how much you can safely spend on certain expenses each month. Your leftover income can then be put into a savings account.
Using a budget plan can also help you cut down on expenses. Knowing where your money goes might give you the incentive to cut back on spending in certain areas.
Though all it takes to create an effective budget is a pen and paper (or a spreadsheet), there are numerous online services that make it that much easier. Mint.com is a popular example.
Best Way To Save Money: Pay Yourself First
The number one best way to save money is to pay yourself first.
Set up automatic transfers so that some money gets put into your savings account each paycheck. An automatic transfer ensures that this is done each and every time you’re paid.
Wells Fargo considers the paying yourself first savings plan to be one of the best money-saving habits you can get into. It’s a relatively easy money habit to learn and will boost your wealth more than any other.
Most experts, including TIAA, suggest saving at least 20% of your paycheck each month.
Of course, that’s not doable for everyone. Even saving as little as $50 or $100 per paycheck will help you create healthy money habits that will contribute to long-term financial success.
The best way to save money is different for everyone. Yet it almost always starts with eliminating debt, setting savings goals, using a budget, and paying yourself first.
Use all of these tips and you’ll find that saving money is a whole lot easier than you previously thought.