When you’re barely scraping by each month, saving money may sound impossible. But, until you’re able to set aside some cash each month for emergencies and other financial goals, you may never get ahead.
To help you break the cycle of living paycheck to paycheck, here are 4 ways to make saving money a priority.
1. Track your expenses and trim your budget
When you’re living paycheck to paycheck, sometimes it feels like you have no idea where all your money goes each month.
Well, one way to break the cycle is to find out exactly where your dollars are going. To do this, keep track of all of your expenses over the next couple of months. You can use any of the following methods to help you out:
- Your online account if you use a debit or credit card
- Money management software
- An Excel spreadsheet
- Pen and paper
As you take a look at where your money is going, find areas where you can cut back on some discretionary spending. Since it’s easy to pass a want off as a need, you have to be honest with yourself in this process.
For example, maybe you can make your own lunch at home instead of going out. Or you can skip the coffee shop and brew your morning caffeine fix at home.
These little things aren’t going to change your world, but they can help you gain some traction when you’re just starting to save. And, the more you can cut back on little things, the more you’ll be able to set aside at the end of the month.
2. Set your savings goals
Saving money isn’t fun if you don’t have anything to save for. Sure, we all know that we should save for retirement. But if that’s decades away, it’s hard to visualize how it will feel to achieve that goal.
So, focus on your other financial goals. For instance, say you want to take your family on a Caribbean cruise. Or you want to buy a house in a few years and need a down payment. Write those goals down and visualize how it will feel to achieve them.
When you’re in this future-oriented mindset, it can be easier to eschew needless spending now in favor of something more important later. After all, the idea of a week on the beach is a lot more exciting than having a lot of random stuff you can do without.
3. Go cold turkey
For some, it takes a major shock to their system to overcome difficult obstacles. With this strategy, you simply start paying yourself first and forcing yourself to make do with what’s left.
The traditional way to do this is to set up an automatic transfer from your checking account to your savings account at the beginning of the month. This way you’re not tempted to spend it on unnecessary items.
A more subtle way to do it is through Chime’s Automatic Savings program. Here’s how it works:
- You use your Chime Visa® Debit Card for your everyday purchases.
- Chime will round up each transaction to the nearest dollar.
- The round up amount gets transferred from your Chime Spending account to your Chime Savings account automatically.
For example, say you stop by the gas station for a soda and pay $1.12. If you’re enrolled in Automatic Savings and use your Chime Visa Debit Card, Chime will round up that transaction to $2.00 and transfer the $0.78 difference to savings.
It might seem small, but as your transactions grow over time, you could end up saving a nice chunk of change each month without even noticing it.
Another option is to use Chime’s “Save When I Get Paid” feature, which automatically sets aside a portion of your paycheck into savings as soon as you receive it.
4. Find ways to earn extra cash
If you have a frugal personality and can’t find significant ways to save with your current income, another option is to earn more.
For some people, this may mean working a few hours overtime every week or asking for a long-overdue raise. For others, it may mean turning their passion into a side business to earn a little cash on the side.
Instead of spending that money, simply set all of it aside in savings for your different savings goals.
Give it a try
Even a small amount of savings can make a big difference over time. As you consider all of these steps, you might want to try them out one at a time to see which one works best for you. You’ll find that saving money can be easier than it seems.
This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.