A medical emergency or unexpected property damage can easily turn their lives upside down and force them to pile even more debt on top of any already existing monetary obligations.
To stave off such grim outcomes, it is important to have access to at least some funds tucked away in an emergency fund. While many wish to reach a sizable sum of money in as short an amount of time as possible, this is not how savings work.
Instead, follow the tips outlined below and start setting aside a fixed amount of money every month in a smart and productive way that will bring you the maximum benefits for your current financial situation.
1. Get Real With the State of Your Debt
A good starting point is to have a realistic estimate of your current debt and monthly expenses. Mortgages, car payments, loan payments, cable and data monthly plans, and various other subscription services could quickly drain your monthly income.
Many people find themselves overwhelmed when trying to manage their debt spending on their own. If you also find the whole ordeal to be too stressful or you feel lost in how to manage all of the different payments, it may be a good idea to turn to an expert.
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Licensed Insolvency Practitioners such as Hudson Weir can help both business and individual clients find the best method to keep their debt in check while maintaining maximum disposable cash.
Having a person with experience in the field can help you restructure your current debt arrangements leading to decreased monthly payments and increased opportunities to start saving money.
2. Define A Concrete Goal and Set Appropriate Timeline
Finding the will to cut costs and start saving money can oftentimes remain little more than wishful thinking. What can push you to keep up with your intentions is setting a concrete financial goal that your savings will go towards.
Renovating your apartment, going on a nice vacation, or finally ditching your current car in favor of the one you’ve always wanted, it doesn’t matter if your specific goal is something small and mundane or a grandiose purchase of a fancy item, knowing exactly what the money is going to be used for is a powerful motivation that will keep you on the right track.
Another equally important aspect is to set a timeline for your savings that is in accordance with the chosen target. Giving yourself too short of a timeframe and seeing how far you still are from your desire can feel extremely discouraging.
3. Open A Savings Account
If you don’t already have one, a savings account is great to get you started on money management. Even though the current interest rates are among the lowest they have ever been, starting a high-interest savings account still offers distant benefits.
After opening a savings account, setting up an automatic payment plan is one of the best ways to start saving. Opening a separate savings account that you only use for an automatic payment plan can help you aim to save $1,000 each month. If you open an account with Aspiration, they’ll even give you a $150 bonus for using them.
4. Use Apps to Help You Save
Nowadays we don’t have to rely on cumbersome excel sheets to help us navigate through our monthly budget. There are multiple convenient apps that can be with us anywhere we go and stop us from making impulsive buying decisions that will eat up a portion of our monthly savings goal.
Users can input a disposable monthly income in the app and try to stay within the set limitations. Of course, in order for the budgeting apps to achieve their purpose, the users must regularly take the time to input their expenditures. Furthermore, many apps do not offer access to their full set of features for free, and the price for premium subscriptions must be taken into account.
One app to try out is Acorns that will help you save money and invest your savings. Think of it as a tool to grow the money you already have with consistent saving and investing. Generally, you’ll earn money from your investments and by making qualifying purchases if you link your card to the Acorns account.
5. Don’t Spend
One of the biggest enemies of having a healthy savings fund is impulse buying. After all, we all need a little pick me up after a hard day at work or having to deal with the effects of the global COVID-19 pandemic.
These little purchases can quickly add up, though, and at the end of the month it may turn out that they are responsible for the disappearance of a sizable portion of our income. Also, it may be best to cut out any regular habits that are not that essential.
While it may be impossible to completely stop going to the local Starbucks, reducing the overall number of coffee trips is definitely gonna have a positive impact on our savings. To get our spending under control, it may be necessary to realign our mental focus and thinking.
6. Pay Debt First, Think About Savings Second
As a rule, the interest rates on savings accounts are always lower than what you pay as interest on your outstanding debt.
In practice, this means that putting money into a savings fund while neglecting any debt payments will inevitably lead to unnecessary losses.
If you find yourself in a situation where you have to pick between sticking to your chosen monthly savings goal and spending money to reduce your debt, always choose the latter.
7. Get A Second Job or Side Hustle
Diversifying our income streams can be a wise decision in the current tumultuous times. In the aftermath of the COVID-19 pandemic, most workplaces switched to remote work allowing their employees to stay at home.
The fact that you won’t have to commute for hours on hours every single day to reach the office can be the deciding factor allowing you to look for an additional part-time job or pick up a side hustle.
Take a look around and maybe pick several freelance opportunities that are within your professional area and won’t require learning a brand-new skillset. Of course, make sure to balance your work-life schedule so that you have enough time to re-energize before the next day starts and avoid putting unnecessary mental strain on yourself by taking on too many new responsibilities at the same time.
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There are also apps that pay you in free gift cards, just for doing small tasks and they’ll give you deposits straight to your checking account. You can check out the best apps that pay you real money to learn more.
8. Start Your Own Side Business
If you are tired of working for other people, why not consider setting up your own side business. This is a good venture opportunity as it may begin rather small but with enough interest from potential clients, it could grow rapidly.
There are numerous stories of people deciding to monetize their hobbies that subsequently managed to overshadow their day jobs and turn into their primary source of income. Personally, I started blogging 6 years ago and now I run a portfolio of sites that bring me a six-figure income every year. You can to, just take a look at your passions and talents and see if you can turn them into a marketable product.
With the Internet intertwined to such an extensive degree with our daily lives, finding clients has never been easier. After all, even people from across the world could discover that they need exactly what you have to offer.
9. Sell Unnecessary Items
If you are strapped for cash with bills looming over your head, the last place many would turn for solutions is their own apartment. This can also act as a great way to declutter. Do you have a coffee table that is just sitting in the corner gathering nothing but dust? Old PC systems that are no longer powerful enough to support the latest software demands but are still functional nonetheless?
Even smaller items such as books, leftover childhood toys, or even various knick-knacks could be suitable for sale online and quickly turned into much-needed cash. Find a suitable online marketplace such as Craigslist, Facebook Marketplace, or sites like eBay that you trust and won’t ask for too much to display your sales offers. You never know and items that you thought were completely without value could actually fetch a decent price.
10. Save On Car Insurance
Car insurance can be a huge dent in our budget and lead to reduced savings. There are multiple avenues that can be taken to try and reduce the amount we pay for it by finding better deals.
For example, if you have the opportunity, ask your insurance company for a multi-car discount. Usually, to qualify the drivers must live at the same address and be family members. Two unrelated people might also be accepted but, typically, they must co-own the vehicles.
If you are nearing your insurance renewal date, it may be the right time to look around for better offers by using sites like Gabi. Keep in mind, however, that jumping at the cheapest one available may not be the smartest move. Check the ratings of the car insurance company beforehand and enter into a deal only if you are sure they have stellar reviews.
11. Refinance Your Student Loans
Acquiring the appropriate degree is a necessity to get people started on the path of their chosen career. Unfortunately, this process comes with a massive debt in the form of student loans that could take decades to completely extinguish.
In the meantime, it will impose a significant monetary drain every month. If you find that you are struggling to make your payments, it may be time to either consolidate or refinance your student loans, depending on their current structure.
Student loan refinancing is usually offered by private lenders at more preferable terms. Shop around and look for offers that best match your monthly payment limits as well as the timeframe of the refinancing loan as a whole.
You can see the best student loan refinancing lenders below:
12. Start Investing Your Savings
If you have managed to set aside $1,000 by the end of the month, you may start thinking about how to invest $1,000. Savings accounts do not offer the best profitability but they balance it out with the complete safety of the deposited funds.
Investing, on the other hand, offers better returns but at the cost of some risk. Still, there are several low-risk investment opportunities that could be within your specific risk tolerance. For those that wish to put their money in the safest possible option, there are government bonds.
These are bonds that have been issued by the government of a particular country and the bonds of the US, UK, etc. are considered to be extremely stable. Of course, as a result, they do offer lower return rates than what can be achieved via other investments.
In short, what we should always remember is that It is never too late to start saving up. With the world becoming quite unpredictable as demonstrated by the recent global events, putting aside some funds could be indispensable and can save you a lot of future headaches.
Pick the tips and tricks that best apply to your specific circumstances and do not falter in your resolve to reach the chosen savings goals.