When it comes to finances, it can be difficult to know where to start. How do you save money when everything’s so expensive? It can be very difficult to even begin saving, especially if you’re just starting out and living paycheck to paycheck.
For many younger people, the idea of a savings account with $1000 in it is a distant dream. However, financial experts say everyone should have at least that much set back in a rainy day fund. According to survey research, most Americans couldn’t even cover a $400 emergency. So, how can you get started saving?
It’s far from glorious, but you need to make a budget. This goes double if you feel like your paycheck dries up halfway between each pay period. Look at how much you make each paycheck and break down where each and every single dollar goes. Your rent or mortgage, your utilities and car payment, your phone and insurance bills.
Look at how much you’re spending on food, on gas, on leisure activities, too. Make sure you know where every dollar is going out of every paycheck. If you’re clearing money on these paychecks that is then getting blown on fun or temporary things, you might have the finances to start saving.
There’s no exact rule on this, but you should save as much as you can. If you make $2000 every month and your monthly bills come out to $1400, then you have $600 to spend on food, gas and the “fun stuff.” If you can set aside even $300 of that and put into your savings account, you’ll have $1200 saved back in four months.
In a year, you’ll have saved $3,600. Before you know it, you’ll have a sizable savings account in case of emergencies! Even if you aren’t thinking long-term with a retirement savings account, saving even a portion of your paycheck each week into a savings account is a huge step in the right direction.
If you’re barely able to clear your bills before your paycheck runs out, however, you need to find ways to cull bills from the budget. Are you living in too lavish of a home for your income? Maybe your car costs more than you can afford. Maybe even your phone or phone plan is out of your budget. Living above your means is a surefire way to have no money saved back for emergencies.