How to Stop Spending and Start Saving Your Money

So you want to save up some money—who doesn’t! Whether you are saving for a big purchase, to pay off a debt or you just want the security of having money in the savings account, saving money is a goal that is hard to reach for many people. It seems that no matter how many times you resolve to spend less, the money just seems to disappear.

So how do you stop spending and start saving money? It all comes down to your spending habits. A habit is a pattern of behavior that you follow almost unconsciously. You probably have a habit of brushing your teeth every night or looking both ways before crossing the street. These patterns of behavior have become so much a part of your daily life that you rarely even think about them. You may also have the habit of picking up a bagel and coffee on the way to work, going out to a restaurant for dinner every Friday or making spur of the moment purchases when you are out shopping. Not that any of these things are particularly bad, but too many frivolous purchases will drain your bank account before you know it. If you want to start saving money, you need to look at your spending habits and see if you can cut out some of these frivolous purchases. This is especially important if you tend to spend more money than you earn.

In order to examine your spending habits, you need to know what you spend your money on. Write down everything you spend in a notebook or spreadsheet—and I do mean everything. That coffee you pick up in the morning or snack you grab after lunch may only cost a few dollars, but dollars add up. Repeat the following to yourself: if you spend it, write it. Do this for several weeks. After awhile you will start to see patterns and be able to find out where all of your money goes every month.

Divide your list of expenses into categories like mortgage, gas, food, car payment, insurance, entertainment and utilities. Some things, like your mortgage, car payment and insurance, are fixed expenses and there is very little you can do to reduce them. Most of your savings will come from cutting back on variable expenses, like gas, clothing, food, and entertainment.

Make Cuts and Set Priorities

Look through your variable expenses and try to find things you can eliminate or reduce easily. For example, instead of buying a coffee and bagel, brew your own coffee at home and keep your fridge stocked with a variety of bagels and toppings. Instead of eating out once a week, go once a month or choose a less expensive restaurant. You could even make your own fancy dinner at home to save more money. When you go shopping, make a list and only buy what you actually need instead making impulse purchases. After you have eliminated the obvious extra expenses take a look at how your finances stand. If you have extra money left over at the end of the month, put it into a savings account. Good job, you have now started saving!

If you are still not saving enough after cutting out the easy stuff, you will have to make some choices. Look through the list of remaining expenses and see what else you can chop. Some things you could try are carpooling with someone to save on gas, downgrading your cable and cell phone packages or put off large, unessential purchase for as long as possible. Some of these choices will be hard, but you will have to decide whether saving money is more important than having a texting plan or buying that new TV.

Once you have decided what your priorities are, stick with them. Remember, it’s all about cultivating good spending habits and eliminating bad ones. This will take some time and practice, so don’t be too hard on yourself if you fall back into old habits occasionally. Just reaffirm your goals and get back on track. Over time, you will develop a habit of saving money and, before you know it, you will be well on your way to reaching your financial goals.