5 Simple Ways To Save Millions Of Dollars In America

 

Sometimes the hardest thing about saving money is just getting started. It can be difficult to figure out simple ways to save money and how to use your savings to pursue your financial goals. This step-by-step guide to money-saving habits can help you develop a realistic savings plan.

1.Record your expenses

The first step to saving money is to figure out how much you spend. Keep track of all your expenses—that means every coffee, newspaper and snack you buy. Ideally, you can account for every penny. Once you have your data, organize the numbers by categories, such as gas, groceries and mortgage, and total each amount. Consider using your credit card or bank statements to help you with this. If you bank online, you may be able to filter your statements to easily break down your spending.

2.Make a budget

Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending. In addition to your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance. Find more information about creating a budget.

3. Plan on Saving

Now that you’ve made a budget, create a savings category within it. Try to put away 10–15 percent of your income as savings. If your expenses are so high that you can’t save that much, it might be time to cut back. To do so, identify non-essentials that you can spend less on, such as entertainment and dining out. We’ve put together ideas for saving money every day as well as cutting back on your fixed monthly expenses.
Tip: Considering savings a regular expense, similar to groceries, is a great way to reinforce good savings habits.

4.Choose something to save for

One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—anything from a down payment for a house to a vacation—then figure out how long it might take you to save for it. If you need help figuring out a time frame, try Bank of America’s savings goal calculator.
Here are some examples of short- and long-term goals:
Short-term (1–3 years)

Emergency fund (3–9 months of living expenses, just in case)
Vacation
Down payment for a car
Long-term (4+ years)
Retirement*
Your child’s education*
Down payment on a home or a remodeling project
*If you’re saving for retirement or your child’s education, consider putting that money into an investment account such as an IRA or a 529 plan. While investments come with risks and can lose money, they also create the opportunity for compounded returns if you plan for an event far in advance. More details in step No. 6 below.

5.Decide on your priorities

After your expenses and income, your goals are likely to have the biggest impact on how you save money. Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs. Prioritizing goals can give you a clear idea of where to start saving. For example, if you know you’re going to need to replace your car in the near future, you could start putting money away for one.