How Can I Budget to Save? Tips for Maximizing Your Monthly Savings
Budgeting is Your Secret Weapon for Saving
If you’ve never made one before, creating a budget and sticking to it can be an intimidating task. With a little guidance, it doesn’t have to be! Budgeting is one of the best ways to maximize your monthly savings in order to reach long-term goals, promote smart spending habits, and secure a financially healthy future for you and your family. A well-crafted budget will act as a roadmap for your money, helping you visualize your goals and follow the best path to reach them.
Making a Budget: A Step-by-Step Guide for Beginners
The very first step in creating a budget is to track how much money you bring in versus spend each month. Using pay stubs and bills, calculate your monthly income and all essential spending such as rent, utilities, groceries, and gas.
For the first month, track all superfluous expenses, like how much you order takeout or impulsively buy something new. Tracking your spending is easy with online tools, such as Peach State Bank’s Home Budget Calculator. If you’re spending more than you’re making, a budget will help you reorganize your finances to start saving successfully. An easy place to start is with the 50/30/20 rule. This is a helpful budgeting guideline that says you should spend 50% of your after-tax income on your needs (bills, rent or mortgage, healthcare, groceries), 30% on your wants (entertainment, dining out, vacations), and 20% toward your savings.
Once you have an idea of how much money you have to budget per month, you can decide what method suits you best for managing it, such as zero-based budgeting. In zero-based budgeting, your income minus expenses should equal zero. Using the spending you’ve tracked, you’ll have a good sense of where you can cut back on spending while still meeting your short and long-term wants and needs. Or, you can use a similar method known as the envelope system. If you are primarily paid in cash, the envelope system works by designating multiple different envelopes and physically dividing your money into how it will be spent, such as ‘utilities’ or ‘travel’.
The Best Way to Save Money Each Month
You’ve already tracked your monthly expenses, so now you can use that knowledge to start saving. With the right banking partner, automating your savings is a breeze. You can designate a portion of your income to always go directly into a high-yield savings account. This creates a stable growth of your savings without the hassle of having to remember to set money aside.
This could also be a good time to audit your recurring subscription payments. You probably don’t need to be paying a monthly fee for a streaming platform you don’t watch anything on anymore. Subscription fees feel small, so they’re easy to forget about – but they can add up to significant amounts over a period of time. If you’re able, lifestyle changes can also lower your fixed expenses, such as downsizing a house or car or investing in more energy-efficient practices.
Savings Tips to Accelerate Your Goals
A good way to prevent impulse buying is to observe the 24-hour rule. Before you buy something you don’t need, spend at least a full day considering if you really want it and if it’s worth the cost. Meal-planning your week in advance can also prevent you from ordering takeout or dining out too much because you don’t know what you’re having for dinner. Sometimes, saving can be made simple through cash-back tools. To see how you can earn up to 1% cash back through your debit card, click here.
Overcoming Common Budgeting Hurdles
The road to savings isn’t always straightforward. There will be some months where you can’t stick to your budget, such as heightened spending periods like the holidays or vacation, or even in the event of an emergency. In case your car breaks down or you have an unexpected medical expense, it’s important to have a designated ‘emergency’ fund so you can take care of yourself without dipping into your savings. A budget should also be flexible. Your income, cost of living, and outside circumstances are always subject to change. Don’t be afraid to adjust your budgeting to reflect any changes. Sometimes, it can be hard to stay motivated when budgeting takes longer than expected. Just remember that building your financial future is a marathon, not a sprint. Slow and steady wins the race!
Your Journey to Financial Security
Now you have all the tools you need to begin successfully budgeting to save. By tracking your expenses, understanding methods like the 50/30/20 rule, and using tools like savings accounts and cash back services, you’re on the right track for success. Ready to get started? Learn how to Maximize Your Savings with Peach State Bank. Contact us today by calling 770-536-1100 or visiting https://www.peachstate.bank/contact-us.