How to Begin Saving Money if You’ve Never Been a Saver

November 6, 2017

The biggest hurdle for a non-saver is just getting started. You can cook up all of the various savings strategies that you want, some of them brilliant, but none of them will move you forward if you can’t take that first step.

That point should never be underestimated. Some people seem to be “natural savers”, while other people never adopt the habit. There’s no mystery to why it happens – natural savers get that way by becoming savers early in life. They save money when they aren’t making a lot of money, and then save a lot of money as their incomes increase. As the years go by, their ability to accumulate savings seems almost magical.

But there’s no magic involved at all. Let’s talk about how to begin saving money if you’ve never been a saver. That’s actually the key to both prosperity and financial independence throughout life. If you haven’t gotten into the savings habit up to this point, begin implementing these strategies, and keep going forward.

Begin By Cutting Your Budget by a Small Amount – and Bank the Difference

Before you can begin a regular savings plan, you first have to make sure that you have the extra space in your budget to make it happen. Admittedly, with the rising cost of living, finding extra is becoming more difficult all the time. But unless you can, any savings plan you come up with will be doomed.

You can start this process by deciding to save a small amount of money on a regular basis. This can be either a dollar amount or percentage of your income. The amount doesn’t matter at this point – the process must be doable more than anything else.

Start with $20 per week, or even 2% or 3% of your pay. The idea is to get started with an amount so small that you won’t notice that you’re doing it. Later on, you can develop strategies to increase how much you’re saving.

But don’t get carried away with that right now. At this point, we’re just trying to get you out of the starting gate.

Set up a Payroll Deducted Savings Plan

This is probably the easiest way to start saving, even with small amounts. It doesn’t fundamentally change what you’re trying to do, but it does automate the process. That by itself is a major advantage.

Use the same strategy here as above – save a small fixed dollar amount or percentage of your pay. But set up a payroll deduction to have the money paid into a savings account or a money market fund. That account should be earmarked specifically for savings, and no other purpose.

It will help if you attach a long-term goal to that savings account. For example, a good goal would be saving up money for the down payment on a home. That might motivate you to avoid using the money for other purposes.

Sell Off Personal Possessions You No Longer Need

This is more about fast-forwarding the savings process than anything else. You want to have a regular savings plan in place, but selling off personal possessions to raise cash can supplement that effort.

This can be periodic garage sales, or the sale of large items, such as a boat or recreational vehicle. The idea is to sell what you have, that you’re no longer using, and convert those items into cash that will go directly into your savings.

The obvious main purpose of this effort is to increase your savings. But it’s also a way of enabling you to build up your savings fast. That’s important because you’ll need to see progress to motivate yourself to go forward.

Increase Your Income and Bank the Difference

There are different ways that you can do this, and in fact, this is an area where you can get creative.

The easiest way is to simply bank any increases in your regular pay. For example, if you get a 3% increase in pay, and you’re already saving 2% of your income, increase it to 5%. If you get a 3% pay increase each year for six years, you’ll be up to 20% of your pay going into savings each year. That’s when your savings will really build up fast.

Another way is to create a second income. This can be a part-time job or even a side business. You don’t have to go crazy with this. You can pick up a part-time job at a few hours per week, or start a side business mowing lawns or tutoring students, and bank a few hundred dollars per month.

If you make $50,000 per year on your regular job and save 2% of that, then you’ll be putting $1,000 per year into savings. If you make an additional $300 per month from a second income, and bank that, that will add an additional $3,600 per year. That will be a total $4,600 per year going in the savings – that’ll put you well on your way.

Save Any Windfalls You Receive

Probably the best and easiest way to do this is with an income tax refund. According to the IRS, the average income tax refund is $3,120. You can even increase your withholding to increase the size of your refund. That will turn your tax refund into a forced savings plan.

The advantage here is that a tax refund is a large, predictable windfall. But it’s not part of your regular budget, so it’s extra money in the truest sense. When you add this to your other savings efforts, it can really supercharge the process of becoming a saver.

If you’re working on a major savings project, such as saving money for the down payment on a house, using these strategies can enable you to come up with a respectable down payment in just a couple of years.

Once You Become a Saver, Keep on Saving and Never Look Back

Once you finally become a committed saver, it’s important to never look back. It isn’t just a matter of saving money for a specific goal, although that can be an important motivator. The longer-term plan should be to save money on a regular basis. Any strategies implemented should be continued and where possible, extended.

Even if your goal is to buy a home, rest assured that you will have certain expenses after the purchase that you have to be prepared for. The best way to do that – short of going deeper into debt – is by having adequate savings. If you become a committed saver, problem solved!

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