The "Trick" To Saving

Let me paint a picture for you...tell me if it sounds familiar.  If so, listen up.

You go to work each day, you get paid for your hard work, you pay bills, you buy those items you've been wanting, you go out with friends, and then you notice there isn't any money left.  The cycle continues over and over.

What have you been neglecting to do?  Probably the most important thing.  Pay YOURSELF.  Some people might wonder how you do that.  It certainly hasn't always been easy for me but I came up with a simple plan that works.  I've also provided the same advice to others and they have also had success.  You're probably thinking I'm going to offer some top secret tips but in reality I don't have any.  My key to saving is DISCIPLINE.  Figure out a plan and stick to it.  Follow the plan and you'll start seeing a nice chunk of change sitting in your account.  Trust me, it feels good too.

In terms of having discipline, it's important to organize your finances and set goals for yourself.  I am able to do this through the use of an excel spreadsheet.  Those that know me well can attest to the fact that I LOVE my spreadsheet.  It's not anything fancy but it keeps my finances organized and easy to understand. I have two sheets: Account Balances and Weekly Spending.  Let's take a look at each one.

Account Balances:
This sheet is basically a list of income, recurring expenses, and account balances.  At the top is your total monthly income. Below that is a list your expenses.  This list should only include expenses that you repeatedly incur (rent, cell phone, cable, student loan payments etc).  Your expenses are totaled, and a monthly balance is calculated for you as well.  To be fully organized, I would also keep track of your checking, savings, and credit card balances.  If you're crazy like me you'll have your 401K balance up there as well.  Example sheet is below.

Once you have an idea of your monthly balance, you should first PAY YOURSELF.  Think of an amount you want to/can save per paycheck.  Then you can pay your bills.  Lastly, you want to gauge an amount for your weekly spending.  This leads me to the next sheet.

Weekly Spending:
Once you have figured out a fair number for your normal spending (for example $100/week), your goal is to NEVER reach that amount unless it's unavoidable.  Think of it as a game.  You already came up with an amount that's going directly into savings, you then set an amount for casual spending, and if you never reach that amount, you have additional money left over each week to put where?  Savings.  I can almost guarantee that this process will become normal for you.  If you are disciplined and honest with yourself, you will have the chance to save more than you ever have.

This sheet will calculate your daily spending and then give you a weekly total.  In the upper left hand corner (yellow cell) you can track the week you are currently in. See sheet below.

One thing you will notice about my weekly spending sheet is that I mark down EVERYTHING I purchase.  I know it seems tedious and annoying, but you will be surprised at what you're actually buying and the price you pay.  Every cent adds up.  Just make sure it's adding up in your bank account and not the accounts of others.

**If you would like a copy of the spreadsheet just let me know.  Hope it can be as useful to you as it is to me.