In a lot of ways, saving money is a lot like going on a diet. It is hard to get started, feels overwhelming once you do start, you want to stop every step of the way, but if you stay the course, it is totally worth it. With Summer in full swing, and pool parties and beach days just about every weekend, going on a diet to look your best is normal this time of year. However, with all those parties, vacations and fun summer days, it can be easy to overspend. We actually wrote a blog post about why we over spend to help you understand the reason it happens. Instead of spending all your money, or going into debt this summer, why not go on a summer diet for your finances as well? Just like a real diet, if you stick with it, you will be happy you did.
Step 1: Set a Goal
No plan to get lean is complete without a goal. If you don’t start with the end in mind, your efforts will be less effective. Make your goal an actual dollar amount you would like to save. Instead of simply wanting to cut back or spend less, make your goal to have X amount of money in your savings account by the end of the summer. This will give you something to work towards, allowing you to track your progress along the way.
Step 2: Workout (your budget, that is…)
Every good effort to lose weight includes some form or exercise. When it comes to your finances, it’s no different. Working out a budget for how much you will allow yourself to spend on certain categories is the best exercise you can do. Set strict limits on how much you can spend in certain categories and keep your eating out and entertainment limits as low as possible. Those are the two places people tend to overspend most often.
Step 3: Don’t Tempt Yourself
The best way to stay on a diet is to stay away from things that will tempt you. If it’s ice cream, don’t go to an ice cream shop. If it’s french fries, don’t go to In-N-Out. When it comes to your finances, save your money first, then spend. Let’s say you want to save $1000 over the next 2 months and you get paid twice per month. That means you need to save $250 per paycheck. Set up an automatic transfer from your checking to your savings account the day after your paycheck hits your account. If you get paid on the 1st and 16th of every month, have it transferred on the 2nd and 17th. Or, have your employer split your direct deposit so that $250 goes directly into savings and the balance goes into your checking account. If it’s set up automatically, it removes the decision to have to transfer the money yourself.
Step 4: Find Places to Cut Back
While it’s nice to think you will be able to stay away from the things that tempt you, let’s be honest, you’re going to eat out, and you’re going to be at parties with great food, drinks and desserts. You are also going to enjoy a lot of it. With that said, keep your budget in mind. If you are eating out, skip the steak entree and go for a more affordable salad. Have a glass of wine instead of a cocktail. Share a dessert instead of having your own. If you are going to a party, bring a fresh salad to share instead of a heavy dessert. Your money will go a lot further, and you will feel better at the end of the day. Here are some more simple ways to save money.
Step 5: Track Your Progress
Just like a diet, you need to keep track of your progress in order to know how you are doing. Schedule an hour of time every week to track how you are progressing towards your goal. Take a look at how much you are spending and where you might get in trouble. The more often you can review your finances, the easier it will be to stay on track and not get too far behind if you are spending too much.
It’s important to keep one thing in mind: things never go as planned – cars breakdown, kids get hurt and vacations always go over budget. Don’t let that get you down. Keep plugging ahead with your plan and save as much as you can, even if it’s just a fraction of your original goal. Throwing in the towel just because you have some extra expenses isn’t worth it. It’s for those reasons that you need to save money to begin with.
Now, what are you waiting for? Summer is upon us and if you want to get your finances healthy for the rest of it, you need to start today!