Maybe you’re dreaming of a Hawaii vacation with the family, or perhaps you’re hoping to fund your kid’s college education. It could simply be paying down your credit card debt. Whatever it is, most of us have some desire to do something that costs money that doesn’t fit into our day-to-day or monthly expenses. So how do we materialize the chunk of change that’s necessary to make that happen?
Regardless of whether it requires getting a second job or taking on odd jobs, we have to plan for the goal by saving some percentage of what we make for that purpose. Saving money can feel like a daunting task especially when the bills pile up or unexpected expenses throw us for a loop. There’s one trick that can help, and you may find you’re already making enough to save toward your goals: pay attention to your spending.
Peter recently wrote about how devoting 1% of your time (or maybe even less) to building awareness about your spending will transform your relationship with money. It will also help you save money, without having to get that extra job.
If you pay close attention to where you’re spending you’ll begin to notice patterns. Once you see the patterns you can identify areas where you can make simple changes in your habits and then save that money for your goals. I can start by saving receipts and writing down my spending and expenses on a piece of paper or inputting it into a spreadsheet and making notes about the type of expense and whether it was necessary or not.
If I notice that I’ve spent 30% of my income in the past thirty days on discretionary leisure expenses, then I have identified an area where I can make a change and save money. I might limit my dining out to once a week or completely cut it out. I might find free activities to do with friends and family. I can cook my own meals and brew coffee at home. It might not always be convenient, but it comes down to values and priorities. Do I want that Hawaii vacation or not? Yes? Okay, I want to swap those weekly trips to the sandwich shop for the sunny beaches of Oahu.
We want to help you save, America
In honor of America Saves Week we’re offering a 60 day trial with Tiller, which is an extra 30 days, if you sign up this week. Tiller helps you identify financial trends by having you categorize your spending. The trends can help you find areas where you can save. Read more about how we recommend you think about categories before you get started.
You don’t need to categorize every single transaction that populates into your sheet. Focus on today, tomorrow, and every transaction going forward. Start today by sitting down to review your spending. You’ll start to notice trends in the Category Charts, Category Detail, and Category Trends tabs and you can build your own reports and dashboards using pivot tables (read more here). We equip you with the knowledge about your spending habits and then it’s your choice to spend and save according to your priorities.