I am so grateful to my parents for teaching me about saving (& shopping a great sale) from an early age. I have had a savings account in my name for as long as I can remember and I started retirement savings the year I started college. As I have gotten older and talked about money and savings with more of my friends I have found that not everyone finds saving as easy as it can be or knows the ways they can start.
As a blogger, I shop even more than most but I have to balance my spending with what I am saving so that I am always staying within my means and making sure I am prepared in case anything happens in the future. Here are a few of the tips I use
- Automate your savings
You shouldn’t spend more than what you have so if I have less in my checking account, I spend less! Before I even see my paycheck I have 8% of it go directly into my savings/retirement account through work. Then, for each paycheck deposited, I have automatic transfers into savings accounts and money markets. At the end of the month, any money that is still in my account after paying bills and shopping gets transferred into my savings account so I can start back at zero! It almost feels like you are getting paid twice!
- Plan for retirement
I started my IRA when I was a freshman in college making $100 a month essentially. Since I didn’t have any money I only put $20 a month into it but it was still important to me to have it (of note, I put much less or none into my liquid savings as a result). Once I started getting paid adult money, I changed my transfers to the full amount each month to max it out for the year as well as back-filling it the one year prior. Not everyone can max out their IRA but what I like about it is that once the money is there, there is no way I can really go and touch it (without severe penalties) just because I want to shop or something else (like we sometimes do with a savings account).
- Shop for stocks
Let me start by saying that I am by no means a genius (or even exceedingly educated) when it comes to stocks and the stock market. However, every now and then I google some articles and try and read about what is doing well, what is doing poorly and what may happen. I also don’t think stocks should be your first or second means of saving. But stay with me here and you will see why it’s on my list.
Something I started in College one night when I was bored is that I was in the mood to shop but didn’t need anything. To appease my shopping desire, I decided to spend the money I would shop with on stocks instead. This way, if they did poorly I wouldn’t be that upset since the money would have been gone otherwise and I would be happy if they continued to do well! This is something I have continued to do as a kind of “play savings” that I never take out of. Sometimes it is fun to do some research and take a gamble on something. The one piece of advice I have always remembered is “buy what you use.” This piece of advice has led to my most successful stock purchases (gas, airlines, whole foods, Victorias Secret (aka Limited Brands)…).
In some of my research I read about dividend stocks, which are basically a stock that pays you as it makes money (I guess this is where the terms “pays in dividends” comes from). You can pick the option for the dividends to be reinvested into that same stock, getting you more stock…so that is what I do so I keep seeing it grow! (note: this is a VERY BASIC description of how it works, please research this if you are interested!)
- Scrutinize your budget
If you aren’t able to save money, take a step back and look at what you are spending money on. Maybe every time you want to go to Starbucks you transfer $5 into savings instead. There is no shame in starting small! Oftentimes we are spending money on things we don’t really need or want. The other day I was ordering some clothes online and if I hit a spending threshold it would have been free shipping. I was only $2 under the threshold but if I bought the cheapest item that I even kind of liked, it would have put me at $12 more, which was still $5 more than if I just paid for my items and the shipping cost. I decided to just pay for the shipping instead of paying $5 more for something I was indifferent about….even though it is “only $5”.
Hopefully this can help someone!
Do you have saving tips? Comment below!