If you’re looking to get on the path of financial fitness, saving money from your salary is one of the best ways to get started! But, how exactly does one save money from their salary, you might ask? Here are 5 possibilities:
Create a budget
Creating a budget will allow you to identify what expenses you have and give you a plan to pay them off. It’s important to create a savings category to help you plan to put aside money every month without having to make the conscious decision to do so. A budget can also help free you up to do more with your money than just watching the dollars go out.
When you’re creating a budget, it’s a great idea to include an allowance for emergencies and unplanned events—these come up all of the time! Being unprepared for emergency expenses, like car repair, can cost you hundreds if not thousands of dollars on a credit card. To start, estimate what expenses are most likely to happen over the next year (for example, holiday gifts or home repairs) then calculate how much they will probably cost you. Add this sum to your budget as a miscellaneous expense category labeled “emergency.” Then save enough money in another miscellaneous expense account labeled “unexpected” to cover any other unforeseen expenses over the course of twelve months.
Having the amount you want saved automatically deposited into a savings account will help take the temptation away to simply spend that money on other things. You can do this through a contribution to your company’s 401(k) or by creating a recurring transfer from your checking account into a savings account. It is important that you have the mindset that your savings account is for saving though as it may be tempting to constantly borrow from it.
Avoid Lifestyle Inflation
While in the long run, saving for your future is perhaps one of the best things you can do for yourself. However, it can be easy to live beyond your means when you know that you have a safety net of money to fall back on. This is called lifestyle inflation and has a tendency to create an ever-growing gap between what we earn and what we spend. Saving money takes time and discipline, but this situation becomes exponentially harder as our incomes rise over time.
Bring in More Income
Finding ways to increase your income can be a great way to create the flexibility to save more money. Whether it’s asking your current job for a raise or finding a side hustle that can bring in extra funds, every little bit helps. If you really want to make an impact on how much you’re saving, then we recommend committing the majority of your income from this boost directly to saving.
Find Ways to Cut Expenses
Finding ways to reduce what you are spending is another way that you can save more money from your salary. It’s important to review what areas you are spending your money on and to see if there are any ways you can save. This gives people the power to save without having to make major sacrifices in their lives, as they may be able to find a lot of areas where spending is unnecessary.
How Can CreditAssociates Help?
If you’re looking to save more, then reducing your debt is a great place to start. Getting rid of your debt could allow you to set aside more money to save, all while staying within your budget. If you want to get rid of your debt, but aren’t sure where to start, let us help! Our certified debt specialists negotiate with creditors on behalf of our clients all day every day. We’ve helped thousands just like you become debt-free for less than they owe, allowing them to keep more money in their pocket for saving! Get in touch today.
Common Questions About Saving:
How much should I save every month?
A good rule of thumb is to save between 5% and 10% of your monthly income. How much you can actually save will depend on the size of your debt and the amount of money you make. If at first, 5% seems too low, don’t worry about it—start saving what you can and increase the amount as you get used to living frugally.
What should I do with my savings?
Where you put your savings will depend on what your goal is for the funds in that account. If you’re looking to pay down your debt with your savings, then a traditional savings account will be a smart choice. However, if you are planning on using your savings for when you retire in 30 years, then it might be a better idea to put into some type of investment fund that will grow your money at a higher rate of return over a long period of time.
What do I need to save to retire?
The amount that you need to retire is typically based on what age you want to retire, an annual income before you retire, how much you have previously saved up for retirement, what your expenses will be during retirement, and what your life expectancy is. Once you have all these figured out, you can perform a simple equation to figure out how much you need (just be sure to take into account inflation and rate of return for any investments).
Should I save or pay off my debt?
Getting rid of your debt generally has the biggest impact on your financial health. This is because paying off debts early can help you avoid unnecessary interest fees and allow you to start saving more for your future. But, you don’t have to choose between paying off your debt and saving money. CreditAssociates could help resolve your debts for less than you owe, allowing you to keep more money in your pocket for things like savings! Learn more here: How It Works.