• Brittany Hill

I want to save, but where do I start?



A lot of people have goals to start saving. Saving for a down payment on a new home, saving for college for the kids, or saving for retirement. The problem many people often face is that they don’t know where to start with saving. They look at their current income and expenses and begin to wonder how they could possibly save anything from the little that is left over each month.


Does that resonate with you?


We are all taught so save money and we know the importance of saving, but we don’t always know how. When I talk to my coaching clients about saving, the first step I tell them to take doesn’t actually involve saving at all.


What? Yes, you read that right. The first step to saving money doesn’t involve saving money at all.


So what is the first step? The first step is writing down every expense for 30 days. What do I mean by every expense? I mean every penny that leaves your wallet or account needs to be recorded. That $1.29 you spent on fries at McDonald’s, the $0.50 you paid for tolls on your way home, the $3.50 ATM fee you incurred because you didn’t use your bank’s ATM machine. WRITE. DOWN. EVERY. EXPENSE.


Does this sound like it will be a tedious process? To be honest, it is, but it’s worth it. I have been writing down every expense for the past 4 years, and I’ve been able to increase my monthly savings by over 200%.


If it’s really painful for you to write down every expense, there are apps out there that will help you record your expenses. I don’t normally recommend these apps though, because research shows that writing things down helps with memory. If you are depending on an app to track your expenses, it's a more passive approach and you aren’t giving much more focus and attention to your monthly expenses.


So, get a spreadsheet or a notebook and write down everything. Some people take time at the end of the week and record their expenses. This works well for people who put all of their expenses on a credit card or debit card. Others write down the exact expenses daily. This is what I do, and it’s what I have seen that helps people track their expenses with the most accuracy.


After you have recorded all of your expenses for a month, the next step is … analysis. Look through where your money has gone for the past 30 days. Is there any leakage or waste? Are you spending money in places that aren’t really necessary? What expenses can you cut out that could save you money each month?

Back in 2016, after I analyzed my expenses for the first time, I identified my biggest problem area … food. I was spending close to $150 per week on groceries because I intended to cook and be responsible, but I was spending close to $200 on eating out, because it was hard to tell my friends no when they wanted to go out to eat. The result, I ended up throwing away a lot of the groceries I had purchased. Sound familiar?


Not only was I able to identify areas where I was spending too much money, I was also able to identify subscriptions and recurring expenses that I wasn’t using. I cancelled 4 subscriptions that I hadn’t used in months, as was able to save $90 a month. That may not seem like a lot, but it adds up over time, for sure.


Once I saw how much money I was wasting on paper, I knew I had to take action. What does the action lead to? A budget. The budget should consider all of your sources of monthly income, as well as your monthly expenses. I made a plan of how often I would eat at home and how often I would go out to eat. I estimated how much I would spend on gas each month, and took an average of my utility bills to estimate those expenses. All of my monthly expenses, were included in the budget.


The last step in building your budget is simple math to see how much you're left with at the end of the month after all of your expenses. Hopefully, after you subtract your expenses from your income, you end up with a positive number. That number is your savings!


If your expenses are greater than your income, take another look at your expenses and see what you can cut, even if it’s just temporarily, until you can build another stream of income. (Check out the Multiple Streams of Income blog category for ideas on generating additional income).


Once your budget is in place, stick to it. As time goes on, see if there are additional areas where you can save more money. If you can master building a budget and sticking to it, you will start to see your savings account growing before you know it!


Until next time, stay S.M.A.R.T. about your finances!

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