How to Save Money Consistently Every Month this Year
A few weeks ago, I updated one of my posts on all the ways to save $500 a month. Many of you seemed to have enjoyed reading it.
Although there are some simple and fantastic money-saving hacks in that post, I thought it would be good to get right down to the budgeting aspect of getting money saved up.
Saving money is tough, even when you’re being good and doing all the right things, you might still find that you’re not reaching your financial goals.
It is possible to save $6000 in one year, which equates to $500 a month, by implementing one simple strategy. So today, I want to share the three steps I take to save money consistently every month.
But before we go any further, there are a few things you should keep in mind.
Firstly, how much you should save is dependent on your situation and your goals for that money. You don’t have to save $500 a month. It could be more or less.
It depends on what you plan to do with it, whether that be for travelling or saving for a something specific such as an emergency fund.
Secondly, it’s going to require some sacrifice, especially if your net income (a bit more on that later) is much too low to accommodate for an allowance while saving $500 a month.
That’s why the third step to saving money is focussed on increasing revenue. So, depending on your net income, you may have to put in the extra hours at work or side hustle.
But these are the three steps I know to be effective for getting into the habit of saving money consistently every single month. So, let’s get right into it.
How to Save Money Consistently Every Month this Year
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Determine your net income
The first thing you need to do is determine your net income. For this to happen accurately, you will need to list every single one of your expenses. No exceptions.
Here a list of expenses to consider:
- Student loan
- Rent or mortgage repayment
- Paid subscriptions
- Minimal credit card payment
- Minimal line of credit payment
- Phone bill
- Car expenses
Be sure to account for every expense big or small. It helps to go through your transaction history to make sure you don’t miss anything. It’s a bit annoying, but it’s a really important part of a successful budget.
Now subtract your expenses from your income (after taxes). This will give you your net income.
Let’s say you earn $2200 per month (after tax) and your expenses add up to $1200. Your net income would be $1000. That amount is what you’re going to be working with.
Depending on your expenses and maybe even debt-related repayments, you might find that your net income is close to zero.
If you’re in this situation, then you will need to be brutal and see what expenses you could possibly eliminate. When going through your list of expenses, think absolute essentials only and remove the rest for now.
This could be anything that you can truly live without. Is there a monthly subscription that you can cancel? This could be a gym membership you don’t use or something you don’t absolutely need like entertainment. Yes, that includes Netflix (sad, I know).
If you still find that your net income is just not giving you room to move, then there will be a need to find ways to supplement your income until you reach your saving goal for the year (more on that later).
Set an allowance
Now, it’s time for the fun part. Set an amount of money you think you will need for one month to cover for food, clothing, entertainment, and whatever else you like to indulge.
To save $6K in one year, you will need to put away $500 every month.
So if your net income is $1000, your allowance will have to be $500 or less per month. Can you live off $500 per month and put the other $500 into a high-interest saving account?
If you feel you can further reduce your allowance, go ahead and try it. It’s always best to start off with the bare minimum you think you can live off. You can always add a bit more if you later find you need it.
You might also be wondering why food and clothing would not be listed under your usual expenses. But here is the thing.
Placing these two expenses (along with entertainment fees) under your allowance forces you to re-think how you spend on food and clothing.
When it comes to food, there are so many ways to save money that it is possible to have it covered under your allowance. Same goes for clothes. You can read more on saving in these areas right here.
Here are three simple ways to save on food:
- Cook at home instead of grabbing takeout
- Take lunch to work. You can always take leftovers from the night before.
- Make your coffee at home.
You can save a lot of money by investing in a good coffee machine and a nice insulated travel mug if you’re a little addicted to coffee like me.
Since I bought my Nespresso Machineawesome , I make my coffee for less than a dollar at home instead of paying $5 or more every time I visit Starbucks.
So now you have:
- Listed out all your expenses and wrote them down.
- Eliminated as many expenses as possible by keeping the absolute necessities.
- Determined your net income by subtracting your expenses from your total income after taxes.
- Set your allowance for every month.
- Utilize free cashback websites such as Ebates for discounted gift cards to restaurants. To get $10 credit click here.
If you just found out your net income is much too low to cover all your expenses while also allowing you to save and set an allowance, then earning extra income is a good idea.
Even if you have sufficient net income to save as well as have a decent amount left over for your allowance, it’s always good to earn extra cash. You never know when you might need it.
That’s why this last step is included as part of the strategy I use to save money. Side hustling just makes saving money so much easier.
I have invested hours on side hustles for months now, and the best thing about it is how easy it can be to make money in your spare time.
The two main side hustles I make money from at the moment are blogging and user testing. I particularly enjoy blogging and it’s a bonus that I am already earning money.
Have you ever had a crazy thought about starting a blog of your own? You can check out a few of my posts to give you an idea of what it might be like to blog.
If you want to see how I’ve been progressing since I started blogging a few months ago, you can read my recent blog income report here.
So there you go. The three simple steps you can take to save money consistently every month this year. Do let me know what you think. And thanks for reading!