The strategy I use to save money.
Resources:
Expense Tracker: docs.google.com/spreadsheets/...
Savings Tracker: docs.google.com/spreadsheets/...
According to the BEA, the average American saves only 5.1% of their income. In my opinion, I believe that the rate is so low because many people are not taking steps to maximize their savings. Many Americans base their spending off of their salary, which leads them to having very little money left over.
In this video I discuss the exact strategy that I use to maximize my savings potential, which allows me to save 60% of my income. The strategy I use consists of 4 steps.
Step 1: The Preparation
You cannot maximize saving money without the clear picture of how you are spending your money. In order to maximize your savings rate, you first need to take the time to track your expenses for at least one month. To do this, I use a simple excel spreadsheet, which I provided the link if you would like a copy.
In this phase of the savings process, you simply need to document every purchase you make down to the penny and put it into categorizes. This document will help give you an idea in areas where you can save and once you spend one month tracking all of your purchases, then you can move onto step 2.
Step 2: Understanding The Process
Before you complete the process, I first need to explain the process of saving money. The process I use to save money you must do three things: (1) examine every expense 1 by 1, (2) lower or completely cut out the expense, and (3) calculate and record the difference.
1. Examine every expense 1 by 1
When you look at the document with all of your expenses, look at areas in which you can save money.
2. Lower or completely cut out the expense
When you are looking at all of your expenses, try to find expenses that you can either completely cut out or lower to save money. Many expenses in a person's budget might be unnecessary or by doing research you will be able to find a cheaper alternative.
3. Calculate and record the difference
Once you find an area that you can save money in, the third thing you need to do is record (on the excel sheet) how much money you were able to save. This information will help you determine how much extra money you are able to save.
Step 3: The Examination
In the third step, you simply need to complete the process explained in the second step and try to find areas in which you can save money. The biggest mistake you can make in this process is underestimating the power of saving one dollar. Every dollar adds up and when you keep finding areas where you can save money, then it will add up to hundreds of dollars.
It is also important to know that saving money isn't about depriving yourself of anything; in fact, the key to saving consistently is finding the correct balance of saving vs spending.
Step 4: Money Management
Finally, once you have looked at your expenses and determined how much money you can save each month, the simply create a financial plan that best suits your needs.
*None of this is meant to be construed as financial advice, it's for entertainment purposes only. Past performance is not indicative of future results. Austin Williams does not guarantee any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned may not be suitable for you.*