The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy!
What will you do in the event of a true emergency or financial hardship?
Do you feel like your savings account is a scary joke? It’s likely that you’re not alone. According to CNN Money, more than half of Americans save next to nothing each month.
I used to be one of them. I was the person who thought things would be peachy keen until they weren’t and it was too late to prepare for the unexpected. Having enough funds saved up is important because sometimes, it will be all you’ll have to start from.
I did a great job meeting my goal to pay off a ton of debt last year, but the sad part is, after it was all said and done, I looked around and realized I still felt extremely trapped. Sure, I had less debt, but I had hardly anything saved up leaving me with even less control over my life. In my mind, I couldn’t really afford to save. But in reality, I couldn’t afford not to.
It’s important to manage your savings goals with your other financial goals and even prioritize them if you need to build up a suitable emergency fund. Most experts recommend saving up three to six months’ worth of expenses but how much you set aside is totally up to you and your specific needs.
If you’re looking to save more this year, but you’re wondering where the extra money will come from, here are five realistic ways to increase your savings rate.
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Sell Items From Your Home
Have you ever wondered how much money is lying around your home in the form of unwanted things? With minimalism really trending lately, most people are eager to declutter and get rid of things that are just taking up space.
If you have old dishes, clothes, game consoles, furniture children’s toys, tools, bikes etc. that you no longer want or need, try selling them online or to others in person or through a garage sale and putting the money you receive directly into a savings account.
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Create Rotating $0 Budget Categories
One of the best ways to save more money is to stop spending it period. To reduce your spending, try to cut a budget category out completely for a few weeks, then pocket the cash you save by not spending.
Creating and implementing $0 budget categories can sound intimidating at first, but it’s a liberating challenge that you can take your time with. Start by cutting out a non-necessity like entertainment or dining out. If your entertainment budget is usually $100 per month and you make it $0, that doesn’t mean you have to sit at home during your free time for the entire month and sleep or read books.
There are tons of free and fun activities you can do that won’t cost you a dime. These include: visiting a museum, inviting friend over to watch a movie, attending a free festival or community event or hiking at a national park just to name a few. When the month is over, you can switch another non-necessity budget category to $0 and save the money you would have spent instead.
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Lower Your Family’s Expectations
Lifestyle inflation can really put a damper on your savings rate. If you and your family are used to living above your means, you’ll need to lower your expectations in order to become more content with what you have and free up enough money to save.
For example, I think iPhones are wonderful, but I’ve never owned one and I have no desire to. Instead of paying over $100 each month to have a phone, I’d rather stick with my more practical smartphone with a lower monthly bill so I can save more money.
Sit down with your spouse and kids (if you have any) and find out what they really value and what they are willing to give up for the sake of financial stability.
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Plan Your Meals
Food is reportedly the fourth biggest expense for American families and falls right behind, housing, transportation, and insurance. If you can manage you cut your food spending, you will be able to save quite a bit for hard times.
You can cut your food spending simply by creating detailed meal plans. Instead of just going to the grocery store with a rough idea of what you’d like to buy, try creating a detailed list of the meals you will eat each day and bring cash with you to ensure you stick to the budget. This will cut out impulse purchases and slash your food budget.
You can also cut back on work lunches by bringing your lunch to work each day and planning ahead to make sure you have enough items to pack for lunch. Bringing my lunch to work has easily saved me at least $1,000 during this past year.
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Get a Second Job or Side Hustle
If you want to save more, you can always earn more. You can get a temporary second job to maintain until you earn enough money to fully stock your emergency fund.
You can always turn one of your hobbies or talents into a money making side hustle. Whether you love to write, draw, design, create crafts, work on computers or play instruments, you can market your talents to others in order to create a profitable side hustle that will generate enough income to significantly boost your savings rate.
If you know that you need to step up your savings this year, these are all strategies that you can implement immediately to obtain measureable results.
How about you all? What specific steps will you take to increase your savings rate over the next few months?
Share your experiences by commenting below!
***Photo courtesy of https://www.flickr.com/photos/76657755@N04/6881508144
