We all know that saving money can be one of the hardest things to do, that is why this article is one of the most important lessons on this website, we all have a little bit of trouble when it comes to avoid overspending, most of the time we become our own victims because having money right there at our disposal makes it easy for us to fall for the tempation of spending every last penny that we have, even if we know that it is not right and that we can’t spend that money because we might need it for stuff that is really important, like paying off debt. Truth is that human nature is complex and almost impossible to control, so we must find a way to avoid overspending, or simply avoid spending money in things that are not important or necessary for us.
This is a very important post because I will teach you how to do just that. Let’s say that maybe we want to put some money away for college, a new car, or even retirement, so we start saving and the money is right there where we can easily take it and spend it, so when something comes up we do exactly what we were not supposed to do, spend it. We think to ourselves there’s no problem, “I will just take a small portion of my saved money and I will put it right back as soon as I can”, but what happens is that we don’t put the money back and we just keep coming back for more until our plans become a part of the past, so you forget about your goals and about what you really wanted, and you start thinking that what you dreamed for is not as important as you thought it was, when it really is important, because being happy, reaching your goals, your objectives and living life the way we want to is part of good financial planning.
What we want to do to have success in our money saving campaign is place our money where we can’t touch it, and if all the management of our savings account can be done without us being a part of it, then things will be a lot easier as we are less likely to fall into the tempation of spending it. Saving money automatically has been discussed in many books, guides, and websites that talk about personal finance. In this article you will learn the most effective way on how to do it.
How to Save Money Automatically
You need to create two savings accounts, I believe that you must have one saving account by now, if you don’t then you should probably want to get one to make this work. The account that you already have won’t be for saving, it will be for spending. You will use this one to pay for bills, groceries, clothes, going out, and for any other need that you might have.
The second savings account that you are going to open is to really save money, you will put in this account the money that you are going to use in the future for retirement, a new car, education, vacations, etc. This is the account that you are going to use to set up an automatic savings plan.
There are two ways to approach automatic money saving, you can do it directly through your brick and mortar bank or you can do it through an online bank. Anyway you choose it will work, all you have to do is simply set the percentage that you want to save everytime you make a deposit in your spending account. For example if you got paid today, you deposit your money in your spending account, the percentage that you set to save will be automatically taken out from that account and it will be automatically sent or placed in your real savings account. You won’t have to worry about saving money again in your life because it will happen even without thinking about it. The money that you save should be placed in a high interest savings account, this way your money will grow exponentially as you save it.
How to Split up the Money in Different Accounts
This one is easy, all you have to do is go to the HR department and pick up a direct deposit enrollment form. Direct deposits can be split up between several savings accounts, after knowing how much you want to save and how much you need to spend, decide what percentage are you going to place in your savings account and what percentage you are going to leave in your spending account. The money that is saved shall be deposited directly in a high yield online savings or money market account.
The Process
Open a special high interest savings account. As you must know by now online banks usually offer their customers higher savings rates than almost any other brick and mortar traditional bank, because they don’t have expensive teller interactions and expensive paper handling they are able to offer their clients better deals and opportunities. You should check out my article about online banking so you understand the true benefits of using one of these financial entities.
If you are interested then you should set up an online savings account right now. There are several online banks that you could use, in the next article I will review the best online banks, but right now I will give you a quick introduction of my personal favorites:
- ING Direct : You can use it as a savings account and as a checking account, you can also have access to your money at any time in case that you need it for something, you also get some great benefits as free online bill payments, free debit card for purchases, and you can withdraw up to $35.000 from ATM’s.
- HSBC Direct : You can get a special CD for saving that pays a 2.5% interest rate. You can make up to 5 times the national average.
- Money Aisle : They will automatically analyze and compare the online savings accounts rates from almost all the other banks that are online, and they will choose the highest interest savings account rate for your own account. You can make up to 10 times the national average.
Conlusion
After reading this article saving money should no longer be a problem, what you have to do is get started right now, this way you will strengthen your financial plan. You won’t have to worry anymore about saving because you won’t have to think about it, it will just happen automatically. Saving money is something that you have to do, so to avoid falling for the tempation of spending your saved money, simply do it automatically.
There are many ways to save money and as you know saving money is a fundamental part of good financial planning. But to do it right you don’t have to go crazy about every little detail within the expenses that you have. You can effectively create a money saving if you change your mind-set and start seeing things in a different way, in a way that will help you identify which of you expenses are necessary and which aren’t, and also you have to identify which necessary expenses can be trimmed or cut down. There are thousands of ways to do this right, but if you stick to some of the basic principles that will be on this article you will do it right.
How to Save Money:
1. Get Out of Debt : You must be debt free to really start saving money.
2. Make a Budget : You have to make a budget.
3. Cutt off Expenses : Don’t overspend.
4. Create an Interest Beared Savings Account.
5. Stop using your credit card to pay for everything.
6. Get Better Deals for your expenses.
This is a simple guide to start saving money, this guide will give your financial plan more power. Saving money is one of the most important aspects of financial planning, basically because it is where a financial plan starts. These are just a few tips to open your mind so that you can easily come up with new plans and ideas of your own to save a bit more.
1. Get Out of Debt
If you really want to start saving money then you have to get rid of your debt. If you don’t you will always have bills to pay and your saving plans can be affected a lot. If you create a plan and set yourself saving goals you can easily get out of debt to start saving for your real plans and your financial future. If you already have debt and you know that you won’t be able to pay it off by saving some money, then you will probably have to get a debt consolidation loan. Through this type of loan you will only have to pay one bill and the interest rates will be lower, and maybe you will be able to save some money as you get out of debt for good. Debt Consolidation Loans will help you save money through lower interest rates, it will help you save thousands of dollars if you already owe money.
2. Cut off Unnecessary Expenses: Don’t Overspend
Don’t spend more money on things that are not absolutely necessary, sure we all like things and we want to spend money on the things we like but there are many things that are not really important that make us throw our money away, small changes can make a big difference, like changing our transporation method to go to the office, for example if you go to work everyday on a cab swicth to a bus (do the math and find out how much you will save every month just by making that little change), if you go to work in a car figure out a route that will help save more money on gas, if you spend $200 dollars a week eating at restaurants try to spend just $100 or $50 if you can, small changes like this can really add up to your saving campaigns. These are just some examples of a few things that can be done, be creative. What you have to do is take a really good look at all of your spending habits, your bills, everything that makes you spend and try to reduce them a little bit.
- You can consolidate your debts to pay less interest on them.
- You can spend less money on gas, or use cheaper ways of transportation.
- You can move from where you live to a cheaper place.
- You can refinance mortgage.
- You can spend less water to lower your bills.
- You can spend less electricity to lower your bills.
- You can spend less money on other activities, like eating on restaurants, night clubs, cigars, etc.
There are thosusands of ways to cutt off expenses on a lot of different things to improve your saving campaign and strengthen your financial plan. As I’ve said before, be creative!
3. Learn How to Make a Budget
If you know how then make a budget, if you don’t then learn, It is very easy everyone knows how to make a budget and everyone has made one before. Making a budget is basically done by writing down how much you earn, how much you spend, how much you save, and making a balance between them to know how much do you need to get by every month or day. Do this to know exactly what you have to pay for every month so that you don’t exceed your spending capacity in order to reach your saving goals for each month. Make a budget based on what you are spending right now and then figure out a way to trimm it down to %50.
4. Create an Interest Bearing Savings Account or An Online Interest Bearing Savings Account
Create an Interest Bearing Savings Account to place every dollar that you save there! This is a very important step because it will allow you to make money while you save some. Make this a totally separate account from your primary savings/spending account, the money that you place in this account can’t be touched, this way your money will keep growing every month as you keep adding your saved money and interest do their thing. You can also consider higher interest options like CD’s or Money Market Accounts. A very good option to make this point even more effective is by creating the same type of savings account but through an online bank, the will pay higher interest rates, and that’s always better for the person that’s trying to save money and make money at the same time. On the next article I will tell you which are the best online banks, the most secure, trusted banks and the ones that have the highest interest rates available on the internet.
5. Stop Using Your Credit Card to Pay for Everything
If you can pay with cash then do it. People get relaxed about spending with credit cards, people get tempted a lot and it is very easy to overspend if you have one right next to you. If you can quit your credit card then do it. If you have to have one for certain expenses then leave it at home always and only use it for the expenses that are required. Make notes do something that prevents you from falling into temptation of making an unnecessary payment with your credit card. If you restrict the use of your credit card harshly you will save a lot of money.
6. Get Better Deals For Your Spending
Use discount coupons to buy stuff, bargain, buy food in bulk, shop retail and outlets, etc. Once more be creative, saving money is about being creative and frugal.
I didn’t write these tips in order, I just wrote them down as I created this article, with tips 5 and 6 what you have to do is take that saved money and place it in the secondary account that I talked about to make your money grow. These steps can be applied in any order, just make sure that you use them. Now you know how to make your financial plan a little bit better by saving a lot of money if you just make small changes that will make a big difference in your life.
