One of the most important skills that people need to learn is how to save money. Unfortunately, far too many people are buried under a mountain of debt, and they often feel like they will never be able to climb out from under it. However, there is no need to despair if you are in debt.

Everyone can get out of debt and start saving for retirement if they follow some simple steps. Here is a money-saving strategy you can follow.

Start by Creating a Budget

The first thing you need to do is to create a budget. You start your budget by adding up all your monthly income. Next, you subtract all of your monthly expenses for necessities. This includes the cost of food, rent, car payments and any other mandatory monthly bills. Subtract the necessary expenses from your income. The amount you have left over is your optional spending. This is money you can use to pay down your debts, but many people instead blow it on entertainment, frivolous clothing, Starbucks and the like.

Ten Percent

When you create you budget, you need to look to use at least 10 percent of your monthly income to pay down debt and start saving. If you do not have 10 percent of your income to spare, look for ways to cut your optional purchases until you can reach the minimum of ten percent.

Automatic Savings Plan

When you get your direct deposit every month, you should use an automatic savings plan from your bank to direct the 10 or more of your income you save directly into a savings account. When you have a direct deposit into your savings account, this keeps you from being tempted to spend it.

Savings Goals

Your savings goals will depend on your situation, but most people should first start saving money for retirement. You can also set savings goals for big ticket items like cars, houses and vacations.

However, before you start saving for things, you should first make sure that your high interest debt has been paid off. If you have a credit card that has debt with interest rates of more than 10 percent, it will be almost impossible for you to earn a better return on your money by investing.

If you follow these steps, you will be able to start saving money. It takes a little discipline and effort, but it is well worth it. When you save smartly, you will get out of debt and have the money you need for retirement.

THE BOTTOM LINE

The easiest way to save money is to pretend you never had it to begin with. Automatic deposits make this possible.

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