Much of the advice about saving money is focused on quick or short-term fixes. Clipping coupons, looking for sales, and taking advantage of other types of discounts are all important, but for the best results, you need to approach saving money as a real overhaul of your lifestyle and spending habits. The tips below can help you make these big changes and see big savings.
Change Your Mindset
The first thing you'll need to do is make a change in your mindset. Finding ways to save money on things is great, but work on shifting your thinking about money in general. First, consider what it means to you. Is money for security, for enjoyment, or both? How much do you need in the bank to feel reasonably financially secure? Starting to think about money in terms of the actual time it takes to earn it can profoundly shift your relationship to it. Imagine that piece of furniture that you really want, and then think that it will cost a certain number of hours to purchase it, and is it worth it to you?
Deal with Your Debts
Debts cost you money, and that's not just the money that you're paying back. Most debts come with interest, sometimes a hefty amount, and if you aren't careful, with certain types of debts, you can end up paying nothing but interest. You need an aggressive plan to get rid of your debt. First, you need to figure out how you are going to balance that aggressive plan with setting aside money for saving and investing. Most of the time, it's better to pay off your debt first because the interest rate is costing you more than you would make investing the same amount. However, there are exceptions. It's a good idea to work on building at least a small emergency fund to pay for unexpected expenses. You should also try to keep putting money into your retirement fund.
Aside from that, you should focus on becoming debt-free, with the exception of your home mortgage. Put most of your money toward either the smallest debt, for the psychological victory of paying it off quickly, or the one with the highest interest, for the most sensible solution from a strictly financial standpoint. You can also look at ways to reduce what you owe in the first place. Having NaviRefi student loan refinancing available as an option, it may allow you to refinance your student loans with a plan that suits you better and that offers a lower interest rate. For credit cards, you might be able to roll your balance from a high-interest card to one that offers low or no interest on balance transfers. However, examine these offers carefully to make sure that you know when that rate changes.
Set Financial Goals
Setting financial goals is really the key to saving money over the long term because it provides the all-important “why” to support your efforts. Otherwise, saving can start to feel futile, a self-denial without any real purpose. You can set any kind of financial goals you like, whether they are become a millionaire, be smart about investments, early retirement, or a trip to Disneyland, but to increase the chance of your success in reaching them, they should have a few elements.
They need to be as concrete and specific as possible, and you should set a date for achieving them. This gives you something measurable to work toward. Goals can look big and unachievable at first glance, so you also need to identify the small steps that will get you there. This might mean breaking down how much you need to put away each month toward the goal and finding another source of income, such as a second job or gig work.
Have a Budget
Personal finance articles often start by telling you to make a budget, but you'll create a much more useful budget after doing the above work. However, there's one more step you need to take before making your budget, and that's tracking your spending. Over several months, this will give you an idea of where your money is really going, including to occasional purchases, such as getting your hair cut or buying laundry detergent. Be sure to include once-a-year expenses when you make your budget, including vacations and presents for birthdays or holidays. Keep your debts and goals in mind, and be open to tweaking the budget over time.
