How to Save Money: One Year of Salary
How to save money. It’s the million-dollar question. Many of us know how to go out there and make money, which is a wonderful thing. The ability to use our skills and talents to earn income keeps us stable, grounded in reality, and able to sleep at night, knowing that the major bills of our lives—rent, mortgage, bills, tuition, food—are taken care of. As Nely Galán, SELF MADE’s author and founder, puts it, you should aim to walk a parallel track of mission and money, knowing that money keeps you afloat, while mission fills you with purpose.
However, in order to have the money component in place, you have to get past the notion that it’s enough to simply earn it. The money piece of the puzzle will not be complete until you learn what it takes to save it. Heed the wisdom of Suze Orman, Emmy Award-winning television host, New York Times bestselling author, magazine and online columnist, writer/producer, and one of the world’s top motivational speakers, who also wrote the forward in SELF MADE. She says, “If you wait to see how much money you have left at the end of the month to put toward savings, the answer may be zero.” You don’t have to be a math whiz to understand that zero isn’t going to cut it.
The bottom line: just as you actively work to earn money, so too must you actively work to save it.
It sounds simple, but for some reason the question of how to save money doesn’t come naturally to many people. In some cases, they don’t manage to save money because their cost of living is the same or exceeds that of their income. In other cases it’s simply because they spend more than they should on things they don’t really need. Either way, on the road to becoming self-made, saving money will have to be as elemental to you as breathing, because it will ultimately provide the sturdy foundation on which you can live.
Understand the Why
Why should you save money? After all, isn’t life short? Shouldn’t we “live in the moment?” Yes and yes. Precisely because life is short, you should make the most of the one you have. So if you’re scrambling for pennies during your retirement, or as you try to launch a new company, you’re essentially making your life worse. By saving money, you give yourself the chance to live in the moment for many more moments.
Zero in the How
The how is simple, and it’s explained in one word: sacrifice. As Nely writes, “Decide that you are going to stop spending everything you make. Pretend that you make less than you do. Reduce your expenses. What can you downsize? Be strict about new spending. Remind yourself that this short-term sacrifice is going to buy you freedom and peace of mind later in life.” Or consider what author of #Girlboss and Nasty Gal’s founder, Sophia Amoruso says: “money looks better in the bank than on your feet.”
Kick Debt’s Ass
Another tip that will help you get into the mindset of saving is to pay off your debts. Absolving yourself of debt cleans your slate, and gives you a fresh landscape on which to play your cards. As the ancient Lati
n writer Publilius Syrus once wrote, “debt is the slavery of the free.” You don’t have to do it all once, but commit so some kind of payment plan that will start to liberate you. It’s a lot more fun to watch your debt shrink and your savings grow, than vice versa.
Make it a Habit
See it as a game. Allow yourself to fall in love with the feeling of saving. Decide that a percentage of everything you earn is going to be allotted to your savings plan and be firm in not deterring from that plan. Go a step further and do what Suze Orman advises: “Set up an automated monthly transfer from your checking to savings account. Once you lock into that commitment, you’ll be forced to scale back spending to make ends meet.”
Resist the Urge
Stop yourself in your tracks when you find yourself on the brink of spending unnecessarily. Saving can’t happen when you’re overspending. It’s like trying to lose weight while you’re gorging on cheese-fries. Just not going to work. As the experts at Chase put it, “If you’re looking to boost your savings, be aware of what experts call your ‘spending triggers.’ They include shopping when you’re stressed or sad, or being around spendthrift friends. Even the supermarket is designed to get you to spend more than you need to.” Or as Benjamin Franklin once famously said, “Beware of little expenses; a small leak will sink a great ship.”
Work With Momentum
Here’s another great tip from the experts at Chase: “The best time to budget for more savings is when you get a raise or a new job. Extra earnings mean you can stash away a small percentage of your income every month without cutting back on other expenses.”
Ignite Your Side-Hustle
To really rev up your ability to save money, one of the best things you can do is start a business on the side and literally stash every penny from those earnings into your savings. There are all kinds of ways to ignite a side-hustle. Figure out what makes most sense for you, carve out the time, and make it so.