We never really tried to save money each month. In fact, when we first started our budget to save money each month, it was out of necessity. Our son had chronic respiratory illnesses and his doctor was concerned that the repeat infections could lead to asthma.
It was a no-brainer. We had to pull him out of daycare and keep him at home so that his little immune system could recover fully.
We made a conscious choice to reduce our household income by $5,000 a month. It was pretty intense. But, we felt like it was the *only* choice at the time.
But, how do you start a budget when you don’t really need to?
I mean, who would actually choose to put restrictions on their spending when they have “enough” money to pay their bills each month?
I’ll tell you who … people who have no idea where their money went and are consistently broke with days left until payday.
Trust me, it’s totally possible to save money each month without completely sacrificing everything that you enjoy.
How much money should I save each month?
This is an easy question to answer when you’re stretching every dollar to cover your bills. But, when you have enough money to pay all of your bills plus some “disposable” income, it’s hard to know how much you should stash away. It almost feels like you’re deciding “what do I need to give up” instead of “how much do I need to save”.
Instead, think of it this way, “how can I be smarter about my money”? Creating a budget really means making your money work for you.
You woke up early, left your family, spent nine hours working for someone else and then you got a paycheck. Make that paycheck MEAN something. Leverage it into a lifestyle that you can love.
For instance, we took half as much money as we had been making and, with a budget, leveraged that into a safe and (mostly) germ-free environment for our son to hang out and get well.
How much you save each month depends on what your goals are.
How much do you save for retirement?
Basically, the answer to this question is, that depends on how you want to live while you’re retired. In other words, how lavish or frugal would you like to live during your retirement.
The general guideline is that you save 10% of your income per month, starting in your 20s. And, increase from there as your income goes up and you can afford to.
If you don’t currently have a retirement account, it’s a good idea to start saving. Depending on how old you are, retirement is the perfect reason to save money each month and get your budget in place.
Leverage your paycheck into a happy retirement.
How much money do you need to buy a house?
If buying a house is your goal, the down payment is really the main expense. The general rule is to plan on having 20% to put down on your chosen home. But, the bigger your down payment, the less you have to finance through a bank loan.
So, if the home you want to buy is $300,000 – then, you should have $60,000 saved as a down payment. With this in mind, you can be thinking about what a realistic budget is for the purchase price of your home.
Also, how long before you want to buy the home determines how much you need to save to reach your down payment goal.
We have it in our 5-year goals to buy a house. So, we are saving a little bit each month for the down payment. We plan on spending no more than $250,000 for our home and will have $50,000 down. So, over five years, we have to save $500 a month.
Once we buy the house, the $500 will go towards the retirement. Yes, $500 is a lot of money to stash away and not spend. But, we only have one car payment because we paid cash for a junker. So, we consider the $500 kind of a second car payment that we don’t actually have.
How much money do you need to save for vacation?
This really depends on where you want to go, how you’re going to get there and how big your family is. For instance, if you have a family of six and you want to fly to Figi, that’s gonna cost some bucks.
If you have a family of four and you want to staycation in the next town over, that will cost considerably less. The whole thing with vacations is to keep in mind that it’s about spending time together (or apart, if that’s your thing).
Vacation is all about getting away from your daily grind. Getting a change of scenery. Changing your perspective and turning your mind off for a little bit.
You would be surprised at how relaxing sitting by the pool at a hotel in your hometown can be. This is one of our favorite things to do. And, we can leave the boys up in the room with their 13-year old sister while we go downstairs to the restaurant and have a date.
Your vacation doesn’t have to be a crazy overseas once in a lifetime experience.
Of course, it could be if you save enough money.
How do I learn to save money?
Like I said, saving money is super easy when you have no other choice. When it’s the difference between paying the power bill or going out to dinner … you choose the power bill.
But, when you have some disposable income and you want to be more intentional about making it work for you, learning how to save money each month can be a serious challenge.
There are so many temptations right in front of you each month. And, you don’t want to have to sacrifice all of your little treats and indulgences just to save money for a house that you’re not going to buy for FIVE years!
Here’s the deal, you have to change your mind. You literally have to get mad about it. You gave up time alone, time with your family, time at the park sitting on a bench in the shade … to go to work. Bleh.
But, you got a paycheck in exchange for that time. So, make that paycheck work for you. Pay your bills, of course. But, with the “leftover” money, make a plan. Set some goals and “buy” a life that you can be happy about.
Thankfully, there are a ton of resources out there to help you organize all of that.
Simple budget worksheet
We use a budget worksheet in Excel but, my sister uses one in a notebook of graph paper. It’s all a personal preference.
Using a worksheet is great because it helps you to remember each bill, how much you budgeted for it and how much you actually spent on it.
You can also add variables like groceries, gasoline, and HABA (health and beauty aids) to the worksheet and assign a dollar amount that you plan to spend on each of these
Simple budget apps
I tried to use a budget app for a while but, Excel was way easier for me. I have an MBA and spreadsheets are basically my crack.
But, I have friends who I have helped with household budgets who love to use the GoodBudget app. They’re able to reconcile their projected amount with their actual amount spent right when they leave the store and that’s pretty important for budgeting.
For instance, if you add $600 to your “groceries” category for the month, you’re going to need to keep track of each time you buy groceries throughout the month. Having an app right on your phone is perfect because, as you’re leaving the store, you just log in the app that you just spent $180.
Simple budget courses
If you need a little bit more help with how to approach your plan for saving money each month, there are some online courses that you can take.
I like anything by Dave Ramsey. He’s kind of the money guru and a lot of people really respect his opinions and advice. I like him because he’s pretty real about budgeting.
Like, if you want to save money each month, then don’t buy stupid stuff like a $300 Nintendo Switch.
You can find Dave Ramsey’s online budgeting classes here.
How can I save money each month without sacrificing?
So, how can you start to save money each month? You’re on board. You want to make your money work for you. And, you’re inspired to start right now.
Lucky for you … I’ve got a couple of ideas 🙂
Lower your cell phone bill
Notice that I didn’t say “get rid of your cell phone”. I’m not asking you to go into the dark ages of the 1990s and get rid of your cell phone(s).
I’m just saying, think about how much you are spending on that bill and see if there are options for reducing that amount.
We work from home so, our cell phones are essential to our jobs. I *literally* can’t make a living without a quality cell phone that is on a legit network.
But, we don’t pay more than $100 a month for our cell phone plan and we have three phones on it. There are options to reduce your monthly cell phone bill.
Check out MintMobile, Total Wireless, and Cricket to compare coverage and prices. Most of the cheaper plans share a network with the big guys like Sprint and Verizon. But, some of them require that you pay out of pocket for your phone.
You have to price shop and compare to see which one will serve your needs best. Just be realistic about what your needs are.
Automate and Electromate (that’s not a word) your spending
Having debit cards and online payments is such an awesome way to save money.
Think about it. You can *literally* schedule money into your savings account without ever needing to exercise any self-control or self-discipline.
Also, one of the biggest expenses for most households is groceries. And, what do they have in the grocery store nowadays? Every. Damn. Thing.
How are you supposed to go into places like Target or Costco to buy food and NOT leave with $200 worth of “other stuff”.
I’ll tell you how … do your grocery shopping online.
Find a store that has grocery pickup AND USE IT.
Make your grocery list and keep it next to you while you shop online. Stick to the list. Stay out of the store and avoid temptation.
Set goals with built-in incentives
This might seem counter-intuitive. I’ve been talking all this time about saving money and now I’m telling you to spend money … just because you have reached a save money goal.
Here’s the thing … if you don’t listen to anything else I say ever … listen to me when I say make your money work for you.
So, if you need a little incentive to reach your goals, do it. Treat yo’self. Just make sure to budget for it!
When I stay under the grocery budget for the month, I use the “leftover” money to take the kids to the movies or we order takeout. It’s a simple thing but, it motivates me throughout the month to keep to the budget. I’m pretty basic.
What is your number one struggle when it comes to trying to save money each month? Let me know in the comments and let’s figure it out together!