I know it sounds unrealistic but this is a very doable thing for lots of people, when they realize how much they’re spending each month on other things.
1. The Goal
Determine why it is you want to save. Is it for retirement? Your child’s college fund? To pay off a mortgage? Depending on what you want to do, it may be wise to set up a plan for achieving a certain amount of money in the bank (or underneath your mattress, no judgment here). Every time we run into unexpected expenses and have to pull out from savings, I cringe because it’s less money available to our children for things in their future. Finally, I said. The money I make from one of my freelance jobs will go straight to savings every month. For me, that meant $450 gets tucked away in an underwear drawer monthly. It started in January, and it’s now July. That means we have about $3k saved for the kids this year. It’s not much, but by December that will be $9k, and that doesn’t even take into account the savings we pull from our normal income–each month that it’s feasible, of course. Because I’m not going to lie and pretend that this is easy or that we have done a fantastic job. I’m just stating that we are sticking to it.
2. The Discipline
Maybe you have a different goal than mine, or you can afford to save more than $450 every month. I challenge you to review your finances. Balance your checkbook properly (or email me for the Excel spreadsheet I use that calculates everything for me), and see how much you really have left over every month. I found that one month we spent about $540 on eating out, toys, dog grooming, and other things we didn’t really need, so I started a system that works for me and ensures that I never get an overdraft fee, or have to sacrifice grocery money for the electricity bill payment or vice versa. It’s not easy, but our family is getting better with finances, and it helps us out a lot! If you analyze your spending and compare it to your income each month, find out where there are extra dollars and pull it out in cash immediately after each paycheck so you’re not tempted to swipe that card on random shopping (or type it into an online site).
I think the most challenging part is when unexpected things come up. If you skip a month of saving, the important thing is to catch up by saving even more the following month. If you can’t though, just do your best. And remember to save money you or your kids get as birthday or Christmas presents. It’s a huge help whenever we receive money during the holidays but we always put it directly into savings. Sometimes that money gets pulled out but if it’s not being used on something for our kids, we put it right back in. The months where we were surprised by car issues or a higher than normal utility bill or work stuff, we gave up going out to eat, and even cut down to one car to save on insurance for a bit.
Be strict with yourself, or it could be easy to spend what’s there and you’ll never have anything saved. Discipline yourself. Get your finances in order, and you’ll see how possible it is!
3. The Money
Did you know that if you start saving $400 when your child is born for the next 18 years of their life, you will have accrued about $86,000 by the time they graduate from high school?! It’s unbelievable to think you could save that much, but without even saving $500 every month, you can reach this goal if you want to. And remember that money isn’t everything. If you fall short of your goal, keep trying!
Remember, anything and everything you can save counts. Your kid’s piggy bank is a crucial part of this plan, too. We save ALL (well, the ones my husband doesn’t keep or lose in the dryer) of our coins in my son’s piggy bank and after 2ish years, we finally had to empty it because it was getting too heavy. I was surprised that we were able to save over $300 for him!
Cater your goals to your family’s situation, and if you can hit saving $450 a month. This breaks down to roughly…
Weekly: $112 (a Target trip)
Daily: $16 (a morning coffee + a fast food lunch)
You probably spend more than you realize, and trying to achieve this goal of $9,000 a year will at least force you to take a closer look at your statements and evaluate your spending. In my opinion, it’s not about how much you make, it’s about how much you spend.
Try the following tips:
- Switch at least three items you normally use to generic brands
- Stop going to restaurants for an entire month
- Cut back on gas as much as possible
- Save all coins
- Pull out a cash amount every pay check and limit yourself to only spending that particular amount
- Buy in bulk (chicken, toilet paper, shampoo, etc.)
- Only do groceries once every two weeks
- Make coffee at home rather than buying somewhere else
- Limit water and electricity usage
- Sell items on Craigslist that you don’t need but are worth something
- BE CREATIVE.
What can you save on this week?