According to The Business Insider.
Schematic diagram. (Photo credit: natanan23/Pixabay/public domain CC0)
I’ve never been good at saving, but I vowed to save 21 percent of my income in 2021.
I do this by sticking to a budget, only buying things that are going to be on special, and saying no to certain invitations.
I also limit travel and leave my credit cards at home two days a week to control my spending.
My big financial goal for 2021 is to save more money from my income. I haven’t reached major financial milestones from my personal goals list in recent years because I haven’t saved enough money each month to spend my emergency fund, retirement account and pay off my credit card balances.
In an effort to reach my goal of being better at saving in 2021, I’ve decided to set more individual goals for myself. I committed to saving 21% of my income for the entire year, starting January 1, and I will do so by reaching my monthly savings goal.
In the first few months of 2021, I have been able to meet my monthly savings goals for each individual item. Here are 5 methods I am using.
- Stick to a fixed budget
This is a very deliberate approach that I used in my first year of trying to save a large amount of money each month. To do this, I started setting a very fixed budget each month, taking into account any flexible expenses that would occur that month (from a friend’s birthday to a house renovation). I also set a time, once every two months, to revisit my spending and savings goals to make sure I was on target for the month.
To make the savings process easier, I set a goal amount for each month at the beginning of the year. To do this, I take 21% of my potential monthly paycheck, divide it into 12 numbered portions, and set a goal for each month.
- Only target discounts
It’s not easy to save this much each month, but one rule that helps me a lot is that at the beginning of the year I make a commitment to myself to only buy items that are on sale or have a discount code. This year I tried to buy anything that was not the full original price.
I found that subscribing to a merchant’s email list allowed me to get coupons or real-time discounts through my VIP membership, and I also installed some coupon programs on my browser so that when I wanted to check out a store, the available coupons would automatically appear.
When I find an item at a merchant that I need at original price, I save the item and take the time to find the discount. Recently this year I’ve been able to take advantage of several expensive items, items that could blow my budget and throw me off my savings goal. (From outfits to my wedding ceremony, take-out food and even electrical items.
- Refuse to sneak in (unwitting) spending
Even though I set a strategic and well-planned budget for myself, there have been unwitting expenses that have kept me from reaching my goals, and I have developed a set of effective rules to see potential unwitting expenses before they happen.
First I never automatically approve of anything, whether it’s an invitation or a brunch with friends. I first review how much of my budget I have to spend on these particular tasks and see what I can afford, or suggest other things that are extraordinarily inexpensive. Although I’ve turned down a bunch of expensive dinner invitations with friends so far this year, I know that saving $60-$85 (per meal) is worth helping me reach my goal, rather than spending on food at restaurants.
For example, if my partner pesters me about subscribing to a TV streaming platform for $15 a month, I’ll add up how much it’s going to cost for a whole year and remind myself that it’s not worth it, and how that cost can help me reach my savings goal.
- Limit unnecessary travel
Before the pandemic, I spent a lot of my personal income and savings on travel, whether it was rideshare and subway fares, or I found myself traveling at least every other month (airfare, hotels, etc.). If I cut my travel and transportation spending by at least 75% in 2021, I will be able to reach my 2021 goal.
To help reach it, I set a fairly strict playbook for myself that included no travel for the first four months of the year (canceling two planned trips) and saving a total of $800. I also planned ahead for possible travel for the rest of the year so I could look for discounts and set alerts for low cost flights.
- Go without a credit card for a few days
It’s easy to go out with a credit card and not realize how much you’re spending. This is the reason I don’t use my credit card for at least 2 days a week. When you pay with cash, you become more aware of the expense and often decline small purchases that total up over the month, like buying coffee or more than you need at the local convenience store.
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