Saving Money Tips Introduction
What is the best way to save money? It’s a question that many have pondered, and it’s a topic that is written about often. Unfortunately, there may not be an “end-all, be-all” answer; after all, personal finance is just that…personal!
All of us are different, and all of us bring a different set of circumstances to the table. What does your current situation look like?
- Do you want to learn how to save money on a tight budget?
- Perhaps you want to know how to save money on food?
- What about how to save money for a house? Or another large purchase like a car?
- Are you a student wanting to learn how to save money in college?
- Or are you feeling the itch to leave town and want to know how to save money for a vacation?
Even though each of us are different, we all want similar things… to improve our financial situation and find less stress and more freedom.
“Save Money, Live Better” is a motto that should be implemented into all of our lives. When money is being saved, financial security is being attained.
A Simple Truth
Sometimes the best ways to save money aren’t doing marvelous or earth shattering things; instead, it’s making small adjustments and fixing the wrong things we are doing with our money, sometimes even habitually.
The beauty is that by discovering these wrong things today, you will have the power to reverse the damage and turn those mistakes into financial strengths!
Learn from the Experts
Mentioned previously, personal finance should be personal. All of us are reading this post from a different set of circumstances in life. Each of us have a different perspective on how to handle finances, and subsequently how to save money.
By bringing on a lot of financial experts, who also come from different circumstances and different backgrounds, the hope is that you will connect with at least one of them.
Initially, the goal was to come up with a list of common savings mistakes that people make on a regular basis. These experts not only delivered that list, but also give incredible money saving tips.
So if you want to know how to save money fast, pay attention to these money saving experts! They have pointed out some common mistakes that you may be making, along with some easy tips that can be applied into your life as early as TODAY!
The Question Asked
Here is the question that was presented to each of these financial leaders:
What is the most common mistake that you see people making in regards to saving for their future?
Get ready! These financial leaders have shared some great advice and great ways to save money. So read on and feel free to take some notes… there will be an action step at the very end.
Matt from Distilled Dollar – “The most common mistake I see is postponing investing. The most common path I see, being 27, has been to pay off student loans before investing. The end result is payments made on tax efficient debt in a tax inefficient manner. My close friends will even leave money on the table and not receive their employer’s 401k match!
That’s free money that’s been thrown away. Plus, as plenty of people will tell you, the best time to start investing is right now. I agree that paying off debt is great, but it shouldn’t come at the expense of postponing investing.”
Aaron from Three Thrifty Guys – “I’d say the most common mistake I see in folks saving for the future is that, they don’t! Don’t mean to be trite – but a lot of stats are point to this fact. There is hope and I do trust that folks are waking up to the fact that many gov’t plans may not be there for them down the road.
Guess another mistake is many just don’t have different savings accounts. We ought to be saving for emergencies, cars, other big purchases. We don’t. I think there is less space in peoples’ finances as well… sometimes people are just doing the best they can, but cannot get ahead.”
Andrew Schrage from Money Crashers – “One common mistake people make when saving for the future is not having specific goals. After all, “the future” can mean just about anything.
To take the strategy a step further, people need to figure out how much they’ll need for each topic and then set mini goals and create a game plan for how they’ll get to where they want to be.”
Gary Foreman from The Dollar Stretcher – “The most common mistake that I see is that people don’t think through the possible outcomes before making a financial decision. Some do it because they know the potential consequences but choose to ignore them. Others aren’t aware of what they’re doing, but don’t take the time to do any research.
For instance, when you co-sign for a loan you should expect that you’ll be responsible for repaying it. When you sign up for student loans, you need to recognize that they’re almost impossible to walk away from them. Even if you don’t graduate or get the high paying job that you expected. The mistakes trap people in debt and keep them from accumulating wealth.”
Robert Farrington from The College Investor – “The number one mistake I see people making in regards to saving for their future is… thinking that they cannot start small. A lot of people get into a mindset like “what difference is $50 or $100 going to make?”.
When, in reality, small amounts over time can make a huge difference in saving for the future. However, it’s really hard to see that early in life. That’s why I’m a huge believer in the power of starting small, but being consistent over time.
When you’re young, time is on your side. You have the “luxury” of starting small. If you start later, but want to achieve the same goal, you’ll have to save more. So, get started saving early! Even if you have to start small!”
Todd Tresidder, Wealth Coach at Financial Mentor – “The biggest mistake people make saving for the future is they focus on saving money. Let’s me explain… Savings is the gap between how much you earn and how much you spend. That means you can increase savings by spending less, or earning more.
The problem with spending less is it creates a sense of scarcity and deprivation plus there’s a downside limit to how far you can go. It’s hard to sustain because it’s unsatisfying for most people.
Instead of trying to spend less, simply align your spending with your values. Studies show you’ll not only spend less, but your satisfactions will grow as well. This places a long-term, sustainable lid on your spending allowing you to then focus on increasing earnings to grow the gap even wider. This had the advantage of being more enjoyable plus there is no upside limit to how much you can earn.”
Deacon Hayes from Well Kept Wallet – “Most people are not intentional about saving for their future. They save money in a jar but don’t know how much is in there.
They get a bonus but they spend most of it instead of putting toward a specific savings goal. How can achieve a financial goal if you are not intentional about how to make it happen?”
Michelle Schroeder-Gardner from Making Sense of Cents – “The most common mistake that
I see in regards to saving for the future is that many people think that they can just start saving later.
Some people either think they’re invincible and can wait to start saving for retirement later, others think that there’s just no hope right now, some think that they’re job is stable right now and they don’t need to save, and so on and so on.
This is a huge mistake because if you can save right now, then why should a person carelessly waste their money? Saving now is always better than waiting to save!”
Trent Hamm from The Simple Dollar Team – “The most common mistake that I see people making is not starting as soon as possible. You’re far better off starting now in an imperfect investment than waiting a year.”
Amanda from Centsibly Rich – “Not starting today. The future can seem so far off, but time slips away quickly. If you keep waiting for “the right time” to start saving – when your car is paid off, when you get a raise, when the stars align – you’ll never get started.
The perfect time to start saving is today. Even if it’s just one quarter, one dollar, five dollars – save whatever you can today. And then do the same thing tomorrow…and the next day and the day after that. Consistency pays off. Make it a habit, and you’ll be surprise how much you can save!”
Chris from Keep Thrifty – “A lot of people wait too long to start saving. I know it
can be hard to put money aside when you first get into the workforce, but every dollar invested at a young age has that much more time to grow due to the magic of compounding interest.
An extra $1,000 invested at age 20 could be worth almost $32,000 at age 65!”
Neal Frankle from Wealth Pilgrim – “The most common mistake I see people make is that they fail to ask themselves all the right questions before embarking on a financial mission.
For example, let’s say you want to buy your first home. Of course you need to ascertain how much money you need to save for the down payment and how much of a mortgage you can afford.
But a question few ask is, what are all the things I can do to drive the interest rate down? Even if you shop the rate, there is still plenty more to do including checking to make sure your credit report is accurate and cleaning up errors. In addition, it’s important to be proactive about maximizing your score even if there aren’t any errors. If you ignore these steps, you’ll needlessly throw away money making it harder to save for other goals.
This is one example of going the extra mile to ask ALL the important questions rather than just the obvious ones. The best way to do that is to run your process by someone you trust and respect and a person who you define as successful.”
John from Vintage Value Investing – “The most common mistake is not starting NOW. Many people, especially young people, believe they don’t need to save until later. I often hear young men and women that are in college say “I’ll start saving when I graduate or get a job”. And then after they graduate they say “I’ll start saving in a few years, I just want to enjoy life right now.” And then after a few years they say “I’ll start saving when I’m in my 30’s and ready to settle down.” And it goes on and on. But the best time to start saving is right now!
Why? Because of the magic of compounding. Compounding is the phenomenon of earning interest on your interest. It’s the difference between linear growth and exponential growth with your savings. And compounding becomes exponentially more effective the longer you let your money compound.
Take a look at the two charts below. You can see just how powerful compounding really is, and how big a difference starting early makes.
Image from Sherman Wealth
Image from Business Insider
The good news is that the power of compounding is a universal law of nature that is available to everyone! All you have to do is start saving…NOW!”
PT from PT Money – “The most common mistake I see people making in regards to saving for the future is trying to rely on self-discipline. Saving for the future is a long-term game. No one, and I mean no one, has the will-power or self-discipline to manually stash money away month after month for 40-50 years. The absolute best way to save money is to automate and separate your saving.
Do this by creating separate accounts (apart from your everyday spending account) where you’ll place the money. This could be in a company 401k, a traditional IRA with an online broker, a Roth IRA, or a simple online savings account.
Then create automatic monthly deposits from your checking account or directly from your paycheck (even better) into these separate accounts. Start with small amounts, and overtime, once you see progress, you’ll start to increase the % you are saving.”
Fitz Villafuerte from Fitz Villafuerte – “The most common mistake that I see people make with regards to saving for their future is not having a concrete goal for their money. One has to have a purpose, whether to buy their dream house, or spend on a family vacation — It’s important to know how and when you plan to spend the money you’re saving.
When you have a concrete goal, it will be easier to avoid spending on unnecessary stuff. Buying the latest gadget will surely pale in comparison to living inside in your own home — just imagine that when you’re tempted to purchase a new smartphone, when your old one is still working fine.”
Ryan Guina from Cash Money Life – “The most common mistake I see people making is not investing. There are several reasons for this, but the most common are overestimating how much money they need to start investing, and thinking investing is too complicated.
The truth is that one can start investing with as little as $25-$50 per month. This is a small enough sum to be affordable for most people. Of course, the more you put away today, the larger your nest egg will be in the coming decades. Investing can be complicated, but it can also be simple if you take a basic approach.
The easiest way to start investing is with a low-cost index fund, or by investing with a robo-advisor, which is a computer managed investment portfolio. Both of these options are easy to set up, and generally don’t require large sums to start. We have additional tips for beginning investors that walk through some other options for getting started.
The big takeaway is to get started now, even if you aren’t an expert. Making small mistakes when you start out isn’t as big a deal as not investing at all.”
Kristen from The Frugal Girl – “People often think that they’ll wait to save until they have some “extra” money. But “extra” money rarely comes around! The best time to start saving is now.
Set up a savings account that’s a little bit difficult to access (an online account is great) and have a small portion of your paycheck automatically deducted and sent to your savings account. Even $10 a week is something, and it’ll add up over time.”
Sustainable PF (Simon) from Sustainable Personal Finance – “The most common mistake that young (single) people make in regards to saving for their future is an unhealthy fixation on owning a home.
In most cases, single folks with no kids are much better off renting and investing than accruing debt in the form of a mortgage.”
GE Miller from 20 Something Finance – “Viewing saving today as deprivation, when the reality is
NOT saving today is deprivation of tomorrow, especially when you lose all of the benefits of compound interest.”
Holly Johnson from Club Thrifty – “The most common mistake people make is failing to
plan out or track their spending. Most people get paid a few times per month, pay their bills, then try desperately to save whatever is left.
Unfortunately, life has a way of sucking up your “extra” money and leaving you with nothing in the end. A better way is to create a monthly budget that gives each dollar you earn “a job.”
In my new book, Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love, I talk about how budgeting helps you prioritize your spending and save more money over time. You don’t need to win the lottery to get ahead; you just need to be smarter with the money you already earn.”
Frugal Trader (FT) from Million Dollar Journey – “The most common mistake with regards to people saving for the future, is not planning and setting goals for the future. In order to know how much to save now, you need to know what you are saving for.
Question to ask yourself, when do you want to retire? How much will you need on a monthly basis to live the lifestyle that you want? From that you can work backwards (or with a financial planner) to figure out how much you need to save now to achieve your goal.”
Tracie Fobes from Penny Pinchin’ Mom – “The most common mistake is that people are not starting soon enough. I often hear that they don’t have enough money to even think about it.
If you don’t make saving for yourself a priority, no one else will. Set up automated savings transfers on each payday and the money will never be there for you to spend. When you don’t see it, you won’t miss it. Even saving 5% is better than saving nothing at all!”
Justin Cupler from The Penny Hoarder – “The most common mistake I see when it comes to saving for the future is starting too late.
Many recent college grads simply haven’t given retirement a thought. Who can blame them? They just started their careers and they should already be thinking about ending it? Well, they should. Often, it’s not until they’re in their 30’s that the concept of retirement suddenly hits them, then they’re playing a bit of catch up.
Compounding this is the fear of taking away one discretionary cash and putting it in some account they cannot touch. This often puts a false limit on the late saver, leading to a possible shortage in their retirement years.
Get in early, that way you can adjust early to the 4% to 6% coming out of your check and not having to worry about upping that to 8% to 10% to catch up in late years.”
Jamie Masters from Eventual Millionaire – “The most common mistake I see when it comes to saving for the future is that they don’t ‘take action now’. I make it a rule to hold accountability checks with my clients, where we review all of their weekly action items so that they can stay on track AND MEET THEIR QUARTERLY NET REVENUE GOALS.”
David Ning from Moneyning – “The most common mistake people make about saving for the future is to somehow think that saving is some form of making a sacrifice. It’s as if that money they save isn’t for him or herself.
Once anyone realizes that they are actually buying freedom with every dollar saved, instead of some useless junk they’ll forget soon after it is paid, then that’s when the real magic of compound interest can start.”
Miranda Marquit from Planting Money Seeds – “The most common mistake I see is failure to figure out their values and how saving can help them better create their desired lifestyle. So many people don’t think about why they are saving, or they don’t think about their values and they end up spending on things they don’t care about.
Once you figure out your values and you understand how they fit in with how you want to live your life in the future, it’s easier to say no to spending that won’t help you get there.”
Stephen Weyman from How to Save Money – “The most common mistake I see about people saving for their future is thinking they have plenty of time to get serious about it later in life. The “start saving early” mantra often falls on deaf ears.
If people were to sit down with realistic projections on their earning potential and expense potential for their lifetime, they would quickly realize that it is never a good time to save and it isn’t going to get much easier later on.
And, even if it does get easier, by that time the amount needed to “catch up” will be so big that it becomes an impossible mountain to climb.”
ACTION STEP: Have a personal inventory session. Consider all of these common financial mistakes. Are you currently making any of these mistakes? Did you make note of any tips for saving money that you can apply into your own life? Take a tip or two and start working on how to incorporate it into your life.
Final Thoughts on Saving Money Tips
A big thanks to each of these financial leaders for sharing their thoughts with us! Here is the saving money challenge for the month: Stop Making These Common Mistakes!
Making small adjustments and corrections to these mistakes will give you the boost needed to start saving money for college, saving money for travel, saving money for kids, saving money to buy a house, or whatever else your situation involves.
These financial leaders have provided some easy ways to save money! Turn your financial situation around by turning these money mistakes into strengths.
Managing your money is a key life skill that puts YOU in control… and once you have that control, then you truly have POWER OVER LIFE!