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It can be hard not to spend your money when you have it. When I got my first paycheck, I had no idea how to save money from my salary. I don’t recall exactly what I spent it on, but I remember blowing through it fast. So fast, in fact, that I was already looking forward to the next payday.
After a while, I was no longer content with spending every single penny from my paycheck. I was living a lifestyle I couldn’t sustain financially. I didn’t even bother learning how to save money from my salary every two weeks. Those bad money habits ended up landing me $169,000 in debt.
Thankfully, I managed to pull myself out and learned a lot while doing so. One of the main ones is how to properly save money from your salary.
I want to make sure that my melanin sisters don’t make the same mistakes that I did when I first started working. To help you make better financial decisions, here are 15 tips to save your money every payday:
1. Pay yourself first
Before doing anything else with your salary, take a cut for yourself. I recommend that you save about 20% of your salary. You can spend this cut on whatever you want. It’s okay to reward yourself, as long as it’s not too big.
If you only live to pay bills, save money, and stay alive, then you’ll likely get demotivated. And you may just end up trying to raise your spirits through shopping.
2. Focus on saving your money when you get your salary
Build the mindset that when you get your money, your focus shouldn’t be on spending it but preserving it. Once you start doing this, it won’t feel like depriving yourself of your hard-earned cash.
3. Utilize automatic bills and savings
Many banks offer automatic savings and bill payment options. These pay your bills or deposit your funds automatically on a certain day of every month. Once you set this up, you won’t have to worry about paying your bills on time–the system will do it for you.
4. Create an emergency fund
When you set up an automatic deposit to save your salary money, build an emergency fund as well. Typically, an emergency fund is about 6 or more months’ worth of expenses. This fund is a safety net if you unexpectedly need to stop working or have a sudden emergency.
5. Save in retirement accounts
It’s smart to start setting aside money for your retirement as early as possible. Some employers can even offer to automatically deposit a portion of your salary into your retirement account. If you want to know more, you can check out my article on these retirement accounts here.
6. Make a budget; save the leftovers
By now, you should already be setting a budget for your monthly expenses. If you have any money left from your budget, do the smart thing and save it.
7. Budget your savings
It’s also a smart idea to set aside a portion of your salary purely for savings. I typically recommend saving at least 20% of your income.
But things get a bit tricky when you’re not taking home that much money in the first place., You might have to change a thing or two if your salary isn’t big enough to save money. One thing you can do is cut costs on your bills by using less electricity or water. Alternatively, you could also revisit your budget and see if you’re allocating too much towards specific budget categories.
Otherwise, you could always try to increase your income. To do this, you could ask for a raise, put in more OT hours, or…
8. Get a side hustle
It’s almost impossible to save money from your salary if it isn’t enough to cover all your living expenses. If you consistently spend over your budget, getting a side hustle might be a good idea. I have an article with some of my recommendations here.
9. Get a higher paying job
But not all of us have the time and patience for a side hustle. If this is the case for you, you might want to consider a new job instead. It will be a lot easier to save money from your salary if you increase your take-home pay. Here’s an article on my suggestions–and none of them require a degree!
10. Fashion your lifestyle within your financial reality
You might have to change your lifestyle if you find that your salary isn’t enough to pay for it. Examine your budget and try to find out where you could be spending less. You have to make a few sacrifices here and there if you want to be responsible.
11. Set a financial goal
It’s easier to get into the habit of saving money when you have a financial goal in mind. When you have a goal, you’re more likely to save a portion of your salary to meet it. That’s because you know your money is working towards something rather than just sitting in a bank account.
Let’s say you want to start investing in stocks to try and increase your passive income. But before you can do that, you should have an emergency fund, or EF, built up. Typically this should amount to about 6 months’ worth of expenses.
Let’s say the goal is to save up money for your EF. If you don’t already have one, financial expert Dave Ramsey recommends saving up a starter fund of just $1,000. Note that this number can change depending on person to person. Trying to reach this milestone serves as extra motivation because having one will allow you to make riskier investments. Additionally, you’re also trying not to disappoint yourself.
12. Make sure you have a deadline for that financial goal
Your financial goals have to have deadlines. Giving yourself some time pressure will push you towards saving money from your salary instead of spending it.
13. Use real cash when making purchases on payday
It might sound a bit old-fashioned, but it might work for you. Forcing yourself to withdraw your salary from an ATM will make it much harder to spend it. After all, spending money feels worse when you can physically feel your cash leaving your wallet.
You’re more likely to spend when using a credit or debit card instead of cash. In the long run, switching to cash might just pay off for you.
14. Invest some of your money to save on taxes
Income tax can be a real pain sometimes, but that doesn’t mean you don’t have to pay it. However, there are tax advantages that you can leverage using your salary money. You shouldn’t have to pay more than what you owe to the government, so it pays to do research!
15. Talk about saving money
It can be easier to start being financially savvy when you have people to share your journey with. Thankfully, our free Wealth Builders Facebook group is always open to new members. If you join, you’ll have instant access to insider information from other financial experts and me. So what are you waiting for? Join now!