Picture a birthday cake in your mind. The flavor is up to you, but chances are, what you pictured was a giant, circular cake with fancy frosting and a nice candle on top. If you’ve ever had to carve up a birthday cake for a group of friends, you’ll know that getting everyone a portion that satisfies them can be tricky. Suddenly, you have to be good at hosting AND math.
Now, imagine you’re not trying to cut a typical birthday cake, but a single cupcake; same icing, same candle, but much, much smaller. It would be difficult to slice up a cupcake in a way that leaves everyone at the party feeling happy they came.
The same goes for savings; if you don’t have a lot of money coming in, finding the right way to divvy it up can be frustrating, and very often, our savings accounts are left without so much as a crumb. If you feel like you have been cheating your savings account of the money you know you should put there, don’t be discouraged, you’re not alone. These days, most Americans only save about 2% of their money, according to one study. Prices are up due to inflation, people are trying to make up for time lost in the last few years, and saving money just isn’t a priority like it used to be.
If you’re living on a limited budget, don’t worry - you can have your cake AND eat it, too. Here are three tips to get you started.
Tip 1: Pay Yourself First
We know you’ve heard it before, but take it from Professor Pig: You are special. You deserve good things. So why not treat yourself like an important person and pay yourself before you pay anyone else?
When paychecks and income hit your bank account, start by taking 20% (or just divide whatever comes in by 5, if you’re not a “percentages-type”) and putting it straight into your savings account. Don’t have a savings account? Well, this is the perfect chance to start one. Most banks or credit unions will offer a savings account at little to no cost, and some even pay interest (and some pay interest AND come with a very cute pig in glasses…hint hint).
When you start saving 20% of your income off the top, you can figure out where else to make cuts. If you recall our January blog post, you’ll remember the 50/30/20 rule of budgeting:
- 50% goes to necessities
- 20% goes to savings
- 30% get spent on whatever else.
Now, you probably can’t cut back on the necessities, but locking up twenty percent for savings means you can figure out where to tighten the belt on spending.
Tip 2: Make it a Challenge
You might have participated in NaNoWriMo, or National Novel Writing Month, in which you write an entire novel in the month of November? Or maybe you spent your November trying to grow a mustache for “Movember?” Well, what about a “No-Spend April” or a “Not-a-Penny-July”? Basically, pick one month of the year and try your best to spend NO money other than your savings and necessities – everything else, you learn to live without for a month. Yes, that includes karaoke night with the crew, or the trip to the bookstore – find your own fun at home with what you have instead, or lean on free resources, like your local library, which has plenty of free assets for your amusement, including albums, movies, and, of course, books.
Tip 3: Cheap is a State of Mind
If you’ve never been a big “get stuff for free” type, now’s your chance. Check out your local Craigslist or Facebook Marketplace for free stuff that you might need; some folks are just happy to get it out of their garage, and you can avoid having to pay for it and put whatever it is to work for you.
Some local radio outlets or newspapers offer coupons or gift cards that they sell for a steep discount. Start building time into your week to snap up these deals and find a way to get the most for your money. Better still, sign up for an app like Upside, Honey or Shopkick, apps that find you deals or coupon codes, or that give you money back for info about your spending habits.
Once you become a couponing superstar or a freebie-finder extraordinaire, figure out ways to take it to the next level. When you buy canned veggies, for example, do you check out the price difference between a small can and a big can? Is the price-per-ounce lower or higher for the big can? Sometimes, “bulk” deals aren’t deals at all; you get more, but you might not save more. Don’t be afraid to take a calculator out when you’re evaluating your purchases.
When you start finding more and better ways to save money, you’ll be amazed how quickly your savings will grow and you’ll have the extra cash to do the things you need to do…or want to do. Just focus on paying yourself first, saving every dime, and trying to have some fun in the process. That will make your next birthday cake – or batch of cupcakes – that much sweeter.
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