How Much To Save and How To Do It

As we’re flooded with new products and services every day, it’s becoming increasingly difficult to stay disciplined with savings.

The temptation to buy and consume can often outweigh long term goals such as retiring early, having financial stability, and providing for your family.

How Much to Save

Each of us has our own unique financial situation and how much you save depends in part on your personal income and cost of living.

When asked to quantify the percentage of income that any individual should save in order to be considered “financially responsible,” Walter Updegrave, a senior editor of Money Magazine, stated “As much as I’d like to be able to tell you to save 10%, 15%……the percentage of income that’s appropriate for you will depend on your income, age, the amount of money you’ve already saved, your employment prospects and, most important, how much you’re willing to forgo immediate gratification for current and future financial security.”

Although a general target and good starting place is 10%, some might be able to put away more whereas others might be hard pressed to save 5%.

Now that we understand how much we should ideally be saving, next comes the difficult question, “How do I save?”

How to Save

It’s easier said than done! We often don’t realize just how often we pull out our wallets to spend on items that are not really necessary.

If you’re finding it difficult to save, here are some tips that may help you begin:

Create a Monthly Budget

Budget, Budget Budget! It’s nearly impossible to realize savings goals if you don’t know where your money is going in the first place. Sit down and write out a list of monthly income and expenditures or use your computer to do this.This is the only way to see how to tighten your budget.

There are great resources on the Internet that can help you with the budgeting task. One website in particular,, although geared toward women, helps break out finances and does all the work for you. Before saving you must get a handle on your budget to be able to determine where you can cut back.

Look Carefully at Your Monthly Bills

Look carefully at your cell phone, electricity, cable, Internet and home phone bill. When it comes to your phone, cable and Internet, ensure that you have the right plan for your circumstances. Perhaps switching cell phone carriers or plans will save you money, or maybe your local cable company is running a package promotion?

Competition exists for a reason; ensure you are using the least expensive provider for your needs. It only takes a few minutes to call or go online. As it pertains to energy bills, optimize your use of energy: keep the lights off when you aren’t using them, do not blast the air conditioning or heat if it is not necessary. Lowering your utility bills is an excellent source of savings.

Cut out Unnecessary Purchases

This is probably the most difficult aspect of budgeting because at first blush nothing really seems unnecessary. This is where the budgeting tool, mentioned above, can come in extremely handy.

For instance, if you buy coffee every morning or lunch while at work, try making your own at home. It is amazing how fast $10 a day on coffee and lunch adds up – that’s approximately $50 a week, $200 a month or $2,400 a year. Think carefully before you pull out your wallet. Do you really need that new pair of shoes or extra pair of earrings?

Save Whatever You Can

Even if you start off small, it’s essential to have a foundation. Commit to putting all your change at the end of the day into a piggy bank or to saving $10 a week. This will put you on the road to acquiring better savings habits. At the end of the year, change can add up, especially if you subscribe to the theory that every little bit helps and you can put that money in an online savings account.

Be A Frugal Shopper (within limits)

How many times have you bought the brand name item when the generic is half the price and approximately the same quality? One place you are likely to realize savings is at the grocery store. Take some extra time to clip coupons and compare prices between different manufacturers and brands. There are some items for which you should not sacrifice quality but others for which there really is a minimal difference.

Also, check out sales, factory outlets and stores such as Marshal’s, TJ Max and Filene’s Basement where you can find the high end products at a fraction of the price. Instead of buying things brand new, frequent web sites such as Craig’s List to see if there is a way to get your hands on what you want even if it is not coming straight out of the box.

Hopefully, you now realize it is not impossible to save money. Once you begin to practice the above steps, it will become an ingrained part of your lifestyle and you will find yourself saving away for a happy, worry-free future.

Topics: Personal Finance

2 Responses to “How Much To Save and How To Do It”

  1. Saving or “paying yourself” FIRST seems to be the best way to consistently save over the long-run. Treat yourself just like you would any other bill and pay it first. You can then do the steps listed above with what you have left. Maybe start by saving 5% of your paycheck, then increase it a little every time you get a raise. Most employers now will allow you to deposit part of your check directly into a savings, retirement account, etc. It has always been easier for me not to spend the money if it went directly into savings before I could get my grubby little hands on it.

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