Can you save money? Because I can't.

[Britanny_Wells]

Hey, guys! I always wonder how people manage to save money and to control expenses. As for me, it's getting a real problem to manage my budget. I always tend to spend my money on different things (even useless), I always need something and can't refuse it. Any recommendations what to do?

[Nutria]

I always tend to spend my money on different things (even useless), I always need something and can't refuse it. Any recommendations what to do?

We used to be $30K in CC debt, so when I ask you this hard question, know that it's coming from someone who's "been there": what's most important to you? Until that answer is "spending less than you earn", you'll never save. IOW, you've got to want to save.

Anyway, some tips:

1. Track all your spending.
2. That means hide your CCs and live off of a DC.
3. Use a spreadsheet to track your checking account balance and forecast the rest of your monthly expenses.
4. Set aside a specific amount of "frivolous money" every month.
5. Track that too, so you don't overspend it.
6. Make it less convenient to tap into your savings account by moving it to a different bank (I like Ally Bank), and don't have a DC on it.

[bjl584]

A simple formula that works for me.

I pay myself first at the 1st of every month. Before I pay any bills or buy anything I automatically transfer X amount into my brokerage account.

I saved up some cash for emergencies and other expenses so I don't have to rely on credit cards or borrowing for expenses.

I pay off my credit card balance in full every month and never carry a balance.

I have discipline when it comes to spending. Don't give in to impulses. Research and study major purchases.

[Nutria]

I have discipline when it comes to spending. Don't give in to impulses

That's the sticky wicket, though...

[disneysteve]

That's the sticky wicket, though...

If you switch to a cash-only system, at least short term, it makes it much easier. If you walk into the store with $20 in your pocket, the most you can possibly spend is $20.

An even better idea is to stay away from the stores unless there is something you actually need. No recreational shopping. Don't go to the mall just to hang out or window shop. And if there is something you need, bring just enough money to get it. That way even if you are tempted by other things, you won't have money to get it.

Nutria is right. You need to know where every dollar is going. Then you can come up with a plan that includes savings as a regular part of the program.

[scfr]

Hey, guys! I always wonder how people manage to save money and to control expenses. As for me, it's getting a real problem to manage my budget. I always tend to spend my money on different things (even useless), I always need something and can't refuse it. Any recommendations what to do?

I can save money, and have managed to do so for quite a long time now. But I used to be really bad at it. What has worked for me might not work for you.

Why do you want to save money and control expenses?
What methods have you tried already? Why do you think they failed?

[LivingAlmostLarge]

Don't shop online either. Do not look in stores or online at anything. it'll help temptation.

[Augustine]

"If you think you can do a thing or think you can't do a thing, you're right." - Henry Ford

It all starts in the mind, and you have to believe that it is possible to for you to save money no matter how much you earn.

Next, you must have a big WHY that motivates you to put aside that money. Any tactical attempts to save money without dealing with these issues will be very frustrating.

[snafu]

Britanny, I'm confident you're clever and can impose a bit of self control if it's needed. If you can be disciplined enough to brush your teeth at least twice a day, you are certainly able to develop a savings habit. If you genuinely want to create savings/investments, give us your numbers, income and outflow and let's cheer your every success

[Britanny_Wells]

If you switch to a cash-only system, at least short term, it makes it much easier. If you walk into the store with $20 in your pocket, the most you can possibly spend is $20.

An even better idea is to stay away from the stores unless there is something you actually need. No recreational shopping. Don't go to the mall just to hang out or window shop. And if there is something you need, bring just enough money to get it. That way even if you are tempted by other things, you won't have money to get it.

Nutria is right. You need to know where every dollar is going. Then you can come up with a plan that includes savings as a regular part of the program.

And I'm wondering, guys, how often you can spend money on those things that you just like? On condition, that you weren't going to buy it before...

[Britanny_Wells]

Britanny, I'm confident you're clever and can impose a bit of self control if it's needed. If you can be disciplined enough to brush your teeth at least twice a day, you are certainly able to develop a savings habit. If you genuinely want to create savings/investments, give us your numbers, income and outflow and let's cheer your every success

Thank you, it's so nice to read such things about myself. I appreciate that you believe in me. Friends, you wrote so many and important things. I'll definitely analyze and try to change my situation.

[colby99]

One word; AUTOMATION

Pay yourself first. So, when you get your paycheck make instant transfer to your broker account. Start with 10% and increase it if you are able.

Invest monthly in low cost ETF’s, for example the one’s which are following / matching SP500 index. Cost should be kept under 0,3%. While your money is growing in your broker account, read couple of books about investing. A good starting point is Random Walk Down Wall Street by Burton Malkiel.

Here are some extra tips which I use to save more money:

Make a budget

You need to know where your money goes. You need to have plan which guides your spending and saving habits. You can find good templates from the internet, just modify those a little bit to suit better for you.

Lunch

Don’t buy the canteen lunch. Make a little bit more food day before the workday and eat this instead of expensive canteen lunch. Also, plan the whole week menu to avoid unnecessary purchases.

Buying a non-necessity

In every purchase think twice before buying. What comes to bigger purchases, it would be good think few days before buying and if there is something you really need (e.g. toilet paper), buy it in bulks.

Credit card debt

your credit card off completely every month because the interest rates are very high (~20% ). If you have credit card debt you should pay it off as soon as possible.

[Milly]

I hate budgeting with a passion. I even wrote a whole blog post about the many flaws. It is so against human nature and sometimes it even prevents you from saving money.

What I am a huge proponent of is tracking your spending.
Here's a free somewhat complicated, but very comprehensive spreadsheet for tracking if you want it: https://www.makingmilly.com/wp-conte...ngTracker.xlsx
The goal is to get your monthly expense averages to go down with time.

Another thing that helps is making money. Ever read one of those thousands of stupid blog posts titled "How I saved $1M in less than a decade" or something like that? You click on it and find out that they make $200k/year and all they did was get rid of their monthly exotic cheese subscription and a few other frivolous things. If I had that income, I'd save a ton of money too.

It doesn't take a ton of money for me to save quite a bit though. So far, only $23k of 2017 is on life expenses. The rest all went to saving, investing, and giving.

The very first time I drove a car, I was on a 45 mph road and stared at the curb. It was the terrifying barrier that I had to avoid at all cost. Naturally, I had to keep jerking myself away from the curb and wobbled all over the road. If I only took home $30k/year, it'd be much harder. I'm definitely not rolling in dough, but I have enough clearance that I can ignore my limit and so long as I keep focused on limiting my expenses. It beats staring at that metaphorical curb. As an anti-budgeter, I'd rather only buy necessities than figure out how much I "can" spend. I'm so grateful I have the clearance to do that!

[Nutria]

It is so against human nature and sometimes it even prevents you from saving money.

Balderdash.

Humans have been budgeting since the first hungry proto-man decided not to gorge himself on that small animal he killed so as to give some to a female in the hope of being able to breed with her. Proto-women have been "budgeting" since they had to bring food back to their weaned offspring (and that's a LONG time).

[disneysteve]

And I'm wondering, guys, how often you can spend money on those things that you just like? On condition, that you weren't going to buy it before...

Once you get a handle on where your money is all going, you can work out a plan that includes savings, spending on needs, AND spending on wants.

A common budget plan that I often recommend is 50/30/20. That's 50% for needs, 30% for wants, 20% for savings.

So if your take home pay is $3,000/month, that means 50% or $1,500 would go to needs like rent, food, utilities, insurance, etc. 30% or $900 would go to wants like dining out, new clothing, movie tickets, video games. And 20% or $600 would go into savings.

We spend money on things we "like" but don't "need" all the time. Just today we went out to lunch with friends ($40) and bought a bottle of whiskey to bring to an event we're attending this week ($80). But the reason we're able to do that is because all of our financial needs are taken care of and we're funding our savings and investments on a regular schedule. We use what remains (that 30%) for the fun stuff.