If you learn how to save money, phase one of the debt cycle shouldn’t be a problem. However, in recent study from Assets and Opportunity, studies show that 27% of Americans don’t have enough savings to cover living expenses for just three months! The rule of thumb is to have enough savings for six months, but if you’re strapped for cash, it’s definitely a start.
People get into debt for various reasons but not having an emergency savings fund is on the top of the list. If you’re unable to pay for unexpected expenses, most people will resort to payday loans and cash advances. It’s a “quick fix” to the problem, but of course it causes a financial headache later down the road. Getting into payday loans can have your finances spiraling out of control in no time.
The key is to have a well established emergency savings fund. In order to do this, you simply have to learn how to save money. The answer is quite simple: spend less than you earn.
I decided to give 5 quick simple tips that can apply to almost everyone looking to save money. These tasks are actionable and don’t involve a lot of time commitment.
5 Tips to Save Today
- Downgrade/Cancel Your Cable: If you’re currently subscribed to premium channels, downgrade your package today! I love watching movies when I get home from work, but sometimes we have to sacrifice luxuries so we can have what we want in the future. Most premium channel packages costs in excess of $20+/month. As an alternative, you can subscribe to Netflix for $7/month and watch all your favorite TV shows and movies.
- Cancel Your Gym Membership: Gym memberships aren’t cheap. Most places can run you up to $70/month depending on where you live. How many times do you go to the gym? Have you ever done the math on how much each visit is costing you? If you’re paying $50/month for a membership and only go 10x/month, is it worth $5 a visit? Instead, try in-home exercises or go for a run outside.
- Think Twice: Did you ever ask yourself why you just paid $75 for a pair of jeans? Or better yet, a $5 soft drink at the movie theatres concession. It’s difficult to stop and think about a purchase you’re about to make when you’re immersed in the spending environment, but take a minute to ask yourself if you’re making a silly buying decision. Most of the time, this does the trick. If you’re planning on making a large purchase such as a computer, TV, or any electronics, always research online vendors to find the best deals out there.
- Try Public Transportation- This might not be applicable to people living outside the city, but taking public transportation can help you save a ton of money. Think about the gas costs, parking fees, and even potential parking tickets! If you have access to public transportation, challenge yourself to try it out for just one month.
- Amazon & Pricegrabber- These are my two favorite websites to find the best deals. Amazon is a great way to find the best pricing on items from clothing, electronics, snacks, and even toiletries! If you learn how to save money on your everyday items, your dollar will go a long way.
After you apply these simple steps, you will have more disposable income that you can contribute to your emergency savings fund. And of course, it’s always a good idea to put 10% of your monthly income towards your savings account. Our next article will go in details on how to stop using your available credit as an emergency fund.