How do I start saving?
I want to save for a new house, vacation, or maybe even a year long sabbatical.
What’s your current lifestyle? What are you willing to give up now to get what you want later. That’s a tough lesson for all of us.
The 3 biggest needle movers for being able to put more in savings: housing, vehicles and eating out.
Housing is easily most of our biggest expense. Conventional wisdom suggests not spending more than 25-30 percent of your gross income on housing. A bank will always be willing to let you borrow the max your income will allow if you are buying. But does that help get to your other goals? Consider buying or renting a place for less to help meet your other goals. Have a roommate if your able. Could you live in a different area that would save additional dollars. You can decide how much you are willing to trade to reach your goals faster.
Vehicles are another big ticket item. Buying new on something that will lose value, especially if you have to borrow the money to purchase it, can land you in a position where you owe more than the car is worth. Consider saving money to buy a reliable used car that you can pay cash for.
There’s also a lot of smaller things that can make an impact over time:
Bringing lunch versus eating out
Cut the Starbucks habit
Don’t order alcohol with dinner out
Cut cable
Ride your bike to work
Take your income – your expenses = Net savings or discretionary spending.
Making a few cutbacks might make it easier to start putting away $50-$100/month. If you want to save more, you can look for more ways to save.
If you put away $100 a month with nothing to start and do that for 20 years earning an average of 8% return you’ll have $59,294.00 and will have invested $24,000 of your own money.
The key is to just start!
Tell me some of your favorite ways to save money? What would like to learn more about?