Advertising
Advertising

20 Better Money Habits to Help You Increase Your Savings

20 Better Money Habits to Help You Increase Your Savings

Isn’t it frustrating to feel you can be saving more?

You have great intentions at the begging of each month–yet somehow you spend most of your money. Are others able to save more because they’re naturally gifted?

If you’re struggling to save money, you’re not alone. Data shows more than half of Americans aren’t able to cover a $1,000 expense.[1] Is the solution to be the average and continue saving little money?

Of course not.

You’re an action taker–someone who doesn’t settle for mediocrity. This is why you’re reading this article now.

The truth is saving money won’t be easy.You’ll have to break bad habits and learn new strategies. Most of them will be simple but will need a focus on discipline. If you’re done aimlessly spending your money, you’ve come to the right place.

But first, be clear of why you want to start saving.

Most people talk about retirement. Others save for a vacation trip. So, is there a right answer for what you should save for?

It depends.

Saving for retirement is a must, but once you’re tracking this goal, it’s time to get intentional. As you already know saving isn’t easy, and you’ll need to change your perspective if you hope to save more.

Grab a sheet of paper or use your smartphone to jot down what having more money will make you feel.

Will you be able to sleep better at night? Do you want to start a business but can’t go all in because of your current job? Do you want to feel great whenever someone talks about money?

Get intentional and think what having more money will bring to you. Use these reasons as your north start. The next time you’re tempted to spend money remember why you’re saving in the first place.

Then, start adopting better money habits. Go through this list and note which habits you’re weak and strong in:

1. Be Honest About Your Bad Habits

The most important habit you can learn is to face reality.

The reason why you haven’t been able to save for a long time is that you’ve delayed accepting the facts. I get it, it’s not easy to accept you’re not saving as much as you should. It’s easier to ignore this and spend the money you could be saving, hoping you’ll have enough left over.

Go ahead and admit to yourself you’ve been lying to yourself for some time now.

This isn’t to make yourself feel bad. Instead, be proud of yourself for being honest and show self-compassion. Now you’re aware you carry bad habits and it’s time to get to work.

Advertising

2. Recognize Your Money Mentality

When you hear “savings,” what comes to mind?

Do you get excited because you’re on track for retirement? Or, do you cringe knowing you have been spending your money poorly these past few weeks?

The truth is you’re not saving because of the stories you’re playing in your head. Set some time in your calendar to interview yourself.

Figure out what money stories you’ve been telling yourself and challenge them. For example, if you believe you should spend your money as it comes–ask how this has resulted in the last few years. Your goal is to challenge bad money stories to create better ones.

3. Define Your Needs and Wants

It’s okay to like expensive brands. The problem is trying to buy everything because you want to keep up with friends and family. As Paula Pant states “you can afford anything but not everything.” This is why you need to define what your needs and wants are.

Create a list of items you truly need. For example, cell phone, and food, house are needs. Then, create your list of wants for items such as high-end shoes, latest smartphone, etc.

You shouldn’t buy everything from your wants list immediately. Instead, pick one and create a budget for it. Save money first and reward yourself with an item from your “wants” list once you’ve reached a savings goal.

4. Understand Your Cash Flow Using Top Tools

You may believe you understand your cash flow (money coming and out of your account.)

You get paid twice per month and spend an approximated amount of your salary on expenses. The rest sits on the same bank account without a purpose. This is a recipe for disaster.

Instead, use money tracking apps to better track your cash flow. Sync up all your accounts and let Personal Capital do the rest.

5. Learn How to Set SMART goals

You already know that saving without intention doesn’t work.

But, stating you want to retire happy isn’t enough. You need to set SMART goals. Think of SMART goals as ones you can take action on and track.

For example, “I want to be rich” isn’t SMART. Neither is “I want to be a millionaire.” But, “I want to save $500,000 within the next 10 years” is SMART.

The purpose of creating SMART goals is to be able to track your progress. How else would you know if you’ve reached your saving goals? Review your current financial goals and make them SMART.

6. Use Tools to Track Your Expenses

If you can’t manage your money well, you’ll always spend it poorly.

Your goal should be to keep your expenses as low as possible while having a high income. The problem is you may not review your finances regularly. Because of this, you might be overpaying for your services.

Again, you can track expenses using a money tracking app, showing you the amount you spend each month.

7. Learn How to Negotiate Your Bills

Once you’re tracking your expenses, take it a step further.

Advertising

Odds are you may be overpaying for your services or pay for ones you don’t need. Negotiating your expense isn’t hard. I was able to reduce my cell phone bill $10 per month with a 5-minute phone call.

You can do the same. Saving money with your bills means you’ll have more money to save.

Organize your expense from the most expensive to the least. Then, start calling your most expensive service providers to negotiate your bills. If you fail to negotiate the first time, hang up and try again.

Most of your service providers will be big companies, so you’ll work with a different person each time. You also have the option to use services like Trim, who negotiate on your behalf. Regardless, don’t settle for what you’re paying now and negotiate your expenses.

8. Start Automatically Saving Instead

Stop trusting yourself to save money.

You’ve already seen where this has gotten you. But, don’t feel bad, we’re all human and prone to mistakes. Instead, create an automatic budget.

For example, have your money automatically transferred to different accounts. Take it a step further and open external savings accounts. This way you make it more challenging for you to withdraw your money.

Now when payday comes, your money is automatically saved.

9. Be Frugal with Your Money

It’s okay to use your money to buy things that make you happy.

But, if you’re not saving enough after cutting your expenses, you need to take a different approach. I’m against adopting frugality for the sake of doing so.

But, being frugal isn’t binary– there are different levels to frugality. If you’re having trouble saving look for areas where you can cut more. For example, instead of paying for Netflix, watch free videos on Youtube.

Repeat this process until there are no more areas left. Cutting services and being more frugal than you’re accustomed is only temporary. Once you’re able to save more, you can go back to the services you love.

10. Switch over to No Credit Card

Debt is often the reason most of us can’t save.

You may earn a decent income, but once you factor in your rent, car note, and credit cards, you’re left with little. T

he average credit card debt is around $16,000.[2] The best way to avoid credit card debt is to stop using it altogether.

Forget about earning points. Leave your credit card at home somewhere out of sight.

11. Review Your Financial Progress Daily

You need to review your finances daily

With money tracking apps, you’re able to do this with no problem. But, even if you don’t review your finances daily, create a reminder to check where you stand once per week or month.

Advertising

To encourage this habit, make reviewing your finances fun. For example, review them while eating your favorite food. Or, reward yourself with something small from your “wants” list. Once reviewing your finances becomes a habit, you’ll be in a better position to save more.

12. Shamelessly Use Coupons in All Places

You don’t use coupons only when you’re broke.

Get into the habit of using coupons to save as much money as possible. Don’t shop for your groceries and then search for coupons you can use. Instead, review the coupons available and buy the items on sale a given week.

Even if you’re able to save $5 per week, this is money you would’ve spent.

13. Pack Your Lunch to Save Money

A $10 meal doesn’t seem like a lot. It may even feel like a bargain depending on how good your food was. The problem is doing this 5 times per week, sometimes even twice per day. All a sudden, your $10 meals cost you $200+ per month.

Instead, make it a habit to pack your lunch to work. Pick one day during the week to meal prep for the entire week and watch your savings grow. Here’re some ideas for you: 25 Ideas for Delicious and Healthy Lunches You Can Take to Work

14. Leverage Tools to Cut Junk Mail

If you’re like most people, you check your email a few times per day.

Companies spend a lot of money to ensure you know about their latest sales. This will only make you want to spend more.

To avoid the temptation to spend, unsubscribe from most of these companies. Or, create a separate folder within your email provider that’s out of sight. Use services like unroll.me to easily unsubscribe from promotional emails.

15. Adopt the 30-Day Rule

Have you ever purchased something only to regret the sale a few days later?

If so, the 30-day rule is for you. Each time you’re going to make a new purchase, set it aside for 30 days. If after 30 days you still want to buy this item, do it. This won’t stop all bad purchases but it will cut the most irrational ones.

16. Work on Important Tasks, Not Everything

“How did it get so late so soon?” – Dr.Seuss

Time is the only resource you have that money can’t buy. This is why you need to protect it at all costs. If you’re honest with yourself, you’re not being productive with your time.

Watching useful Youtube videos or spending time with friends isn’t time wasted. The problem is doing only these.

If you’re already financially well off, then this isn’t a problem. But, if you’re looking to save more money you have to be productive with your time. How?

Like money, you have to track it. Use time tracking apps to get a clear idea of how you’re spending your time. Aim to spend some of your time managing your money better and searching for different ways to grow.

17. Be a Voracious Reader

One of the reasons you’re not saving enough money is because you don’t know the potential each dollar has.

For example, if you’d invested $1,000 in the stock market, it would double within 10 years. Many don’t know this and would rather put their money in a regular savings account.

Advertising

You don’t need to be a financial expert, but you need to understand money fundamentals. The best way to do this is by reading. Go to Amazon or your favorite book store and buy any book related to money. Here’re some recommendations for you: 19 Best Finance Books That The Richest People Read

Read and apply action on anything new you learn. Eventually, you’ll know more ways to put your money to work and choose to save more.

18. Get Educated on the Go

You can learn more from subject matter experts on podcasts. Find some of the top podcasts in business, money and other important areas.

Listen to them to and from your commute to work. Listen while you’re working out at the gym.

Little by little you’ll learn new things. And one day, you too will be a subject matter expert.

19. Choose to Invest in Yourself

You are your best investment. Why?

The more you know, the more you can apply. But, you can’t grow alone. Coaches are great to have because they can view your blind spots.

Yes, they cost money but can save you time in avoiding problems most people make. During your early stages as an entrepreneur or in your career, you may not be able to afford to hire a coach and this is okay. Read and listen to podcasts to grow. Or you can practice these 3 Valuable Ways to Invest in Yourself.

Eventually, your income will grow and you can use this money to invest in coaches.

20. Improve Your Money Skills to Grow Your Income

There’s a limit to how much money you can save but not how much money you can earn. This is why you need to start a side-business. The internet has made it possible to build a business on the side while working a full-time job. Choose to start a business in an industry you’re familiar with.

Will it be easy? No, but worth the effort. If you’re still clueless about where to start, here are some business ideas.

Bonus: Know What to Do with Your Saved Money

Once get traction with saving your money, you’ll need to put it work.

At the very least, ensure your money is getting a high APY (annual percentage yield.) Search online for “top savings accounts” to find banks offering competitive savings rates.

Next, open separate saving accounts for your different saving goals. And use money tracking apps to track your progress.

Final Thoughts

Saving money isn’t easy. Many of the habits you currently have are ones learned from childhood. So, to expect them to disappear in 30 days is unrealistic. Instead of trying to master all the habits covered here, start with one.

Then, start small with your first habit. It may seem to contradict to what you’ve done in the past, but this is most likely why you haven’t made progress. The reason you’d start small is to build a strong foundation.

Imagine building a house with cheap materials to support it. It wouldn’t be long before this house collapses. Trying to build fast habits is like using cheap materials to build a house.

The reason for starting small is to avoid triggering your amygdala’s fight-or-flight response. All this means is you’d be less likely to feel stressed as you’re forming new habits.

You can save more if you commit to do so today. More important, you’ll live a happier life. Isn’t this worth all the sacrifice?

More About Saving Money

Featured photo credit: Eric Muhr via unsplash.com

Reference

More by this author

Christopher Alarcon

Finance Analyst and Founder of the Financially Well Off Blog & Podcast

How to Use the 5 Whys to Get to the Root Cause of Any Problem 15 Best Android Productivity Apps (2020 Version) The Savvy Employees Guide to Asking for a Raise 10 Effective Time Management Techniques for Busy People 20 Better Money Habits to Help You Increase Your Savings

Trending in Smartcut

1 50 LinkedIn Influencers To Follow, No Matter Your Industry 2 22 Best Habit Tracking Apps You Need in 2020 3 How to Break Bad Habits (The Only Effective Way) 4 15 Daily Rituals of Highly Successful People 5 10 Best Mechanical Keyboards to Type Faster

Read Next

Advertising
Advertising
Advertising

Published on January 8, 2021

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

1. Pay More Than the Minimum Credit Card Payments

Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

Advertising

You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

2. Start With High-Interest Credit Card Debt

If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

3. Revisit Your Budget

Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

Advertising

Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

4. Avoid Using Your Credit Cards

Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

5. Start a Side Hustle to Boost Your Income

You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

Advertising

Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

6. Sell Your Used Items for Extra Cash

Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

7. Know When to Seek Help With Your Debt

Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

Advertising

There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

In extreme cases, the debt solution can be:

  • Debt relief – where your debt is partially or wholly forgiven
  • Debt consolidation – taking out one loan to repay others
  • Debt settlement – the creditor forgives a significant portion of your debt
  • Bankruptcy – legal process for seeking relief from some or all your debts

It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

Wrapping It Up

Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

More Tips on How to Pay Off Debt

Featured photo credit: rupixen.com via unsplash.com

Reference

Read Next