Save Dat Money: An Easy Guide to Saving Efficiently

Are you part of the 78% of Americans who report living paycheck-to-paycheck?

Or part of the 71% of Americans that are in debt?

Obviously, you’re not alone. Properly allocating your income in hard.

It takes some planning, a lot of thought to make sure you’re doing it right, and a sprinkle of luck that you don’t have any huge unforeseen expenses before you have some money put away.

Here are three easy steps to help you save dat money right away.

3 Steps to Easily Save Dat Money

Committing to saving is the hardest part. You’ve already done that! Follow these steps to get a grasp on your finances:

1. Figure Out Your Financial Picture

This is the boring part. You need to know what money in coming in each month vs. what money has to go out each month.

What You’re Bringing In

If you have a regular, salaried paycheck, it’s pretty easy to figure out how much you make in a month. It should be a consistent figure across all 12 months of the year.

If you work an hourly job without a consistent schedule, or make commission at your job on top of base salary, it’s a little more difficult to know what amount of money will be coming in each month.

One way to work around this is to make some kind of log or spreadsheet that shows the last several months of income. Then find an average across the last several months to estimate what you make each month.

Another option would be to see what you made in the last several months and then use the lowest earning month as your monthly income. This underestimates what you bring in each month and give you a greater cushion for saving.

What You’re Paying Out

The amount of money going out should only include your non-negotiable expenses each month.

This includes things like rent, student loan payments, child support and other debts. These should be a set number each month, making them easy to include in your calculations.

What you’re paying out should also include groceries, commuting costs, and utilities. These numbers may fluctuate over the course of the year. For instance, your heating bill will be very low in the summer and much higher in the winter.

You can average several months worth of utility bills to find an estimate, or use the highest amount you have paid out in each category for one month to get a number for these expenses.

See What You Have Left Over

Subtract what you are paying out each month from what you’re bringing in each month. If you’re equation looks good (ie you bring in more than enough to cover your non-negotiable expenses), skip down to Step 3.

If you’re equation isn’t looking so hot, start reading at Step 2 to see how you can fix it.

2. Change Up Your Financial Equation

If you’re not making enough to cover all of your fixed costs, there are only two options. You find a way to make more money, or you find a way to reduce your fixed costs.

Make More Money

Making more money seems daunting, but here are some ways you can increase your monthly income:

  • Ask for a raise
  • Pick up a part-time, nights or weekends job
  • Get a side hustle – like renting out your in-law suite or buying a rental property (check out this site)
  • Find a new job with a better salary
  • Pick up more shifts
  • Change to a less desirable shift – night shifts sometimes pay more money because no one wants them

Reduce Your Fixed Costs

Reducing your fixed costs takes serious consideration and sacrifice. Bills like child support and student loan payments are set. There’s no responsible way to reduce those payments, so we need to look elsewhere.

If you want to drastically reduce your monthly costs look first at rent. Is it possible to find somewhere cheaper to live? Reducing rent by $300 per month means you save $3600 a year on living expenses.

Think about getting a roommate to split rent with you.

The other big ticket item would be a car loan or other car expenses. Can you sell your car and take public transportation? Or sell your car and buy something less expensive?

If you can’t make changes to the big ticket items, you can still chip away at the equation by making smaller changes. For instance, turn your heat down a little in the winter and skip A/C in the summer.

Ride your bike to work instead of taking the bus each day. Shop at cost-cutting supermarkets to reduce grocery bills.

3. Automate Your Finances

You know what’s coming in, you know what’s going out and you have a pretty solid idea of the wiggle room you can play with.

Count Savings as Fixed Costs

Once the wiggle room allows, add monthly savings into your fixed costs. Whether this means it goes into your savings account or into your 401(k), viewing savings as non-negotiable makes saving money a priority.

It will reduce the amount of wiggle room money you have but it will set you up better in the long run.

Use Separate Accounts

Consider setting up separate banks accounts for money that has to go out vs wiggle room money. Try splitting your money into two separate checking accounts. One pays all of your monthly bills.

The other is your spending allowance. Using a separate debit card for your spending allowance means you don’t have to skip that latte for fear that it’s gonna short you for bills.

Once you’ve used the spending allowance, you’re done for the month.

Get on the Auto-Pay Train

Set all your bills on Auto-Pay. This keeps you from self-sabotaging your efforts. It gives you no excuse for late or missed payments.

Hide Your Emergency Fund

Set up an emergency fund at a separate bank from your normal bank. Then, set an automatic transfer from your normal account into your emergency fund each month.

Keeping it at a separate bank reduces how often you see it staring back at your from your online login, begging you to use it for a trip to Mexico. Keeping it out of sight is safer, I promise.

Now Get to Saving!

You don’t have to be part of the 78% of Americans with no savings. You can use these easy steps to save dat money, honey!

Looking for other ways to save? Check out this quiz to see if a zero-sum budget is right for you.

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