Recently, I heard a fact that really caught my attention. Low income families that have $500.00 saved for a financial emergency are more likely to survive a financial emergency than a medium income family that has nothing saved. This lead me to ask why is it so hard to save money? One common response I have heard is there isn’t enough money after I pay my bills and other monthly expenses. When I get this response I ask if they have a savings and spending plan or a budget.
Oh no she said the B word! Here’s the thing, most people have no idea where their money is going each month. They are spending $7.00 a day ($35.00 a week) at fast food restaurants to get coffee and breakfast. Or maybe they go to the grocery store with no list and buy items they don’t need because they have it at home in their pantry. There are small changes you can make to save money and stop spending leaks. But first you need to figure out where your money is going.
The best way to determine where your money is going is by tracking each and every purchase you make, bill you pay, and automatic deduction made. Once your know where your money is going subtract how much you are spending from your total monthly income. Are you spending more than you earn or is there money leftover? If you are spending more than you earn review your spending and ask yourself if there are any changes that you could make. If there is money leftover could you put it towards building your savings?
One small change you could make is eating breakfast at home. If you make breakfast at home you would spend approximately $7.00 a week. Or before you go shopping for groceries, shop your pantry to determine what you need. That way you save money by purchasing only what you need. Put the money you save by making these changes into your savings even if it is only a few dollars.
Remember small amounts add up! Saving money for future use can help stabilize your financial life. It requires discipline and sometimes denial, but the benefits outweigh the negatives. Learn more about building a spending plan here: http://edis.ifas.ufl.edu/he827