Did you know that if you save $500 each month, you’ll end the year with $6,000 in savings? This substantial amount of money can be put toward IRA contributions, paying off credit card debt or other outstanding debt, or tucking it away in an emergency fund.
Saving an extra $500 each month, if you’re not accustomed to doing it, can be tricky to put into practice. Even if you’re not used to saving this much, you can still achieve this savings goal. Mallory Micetich, home expert at Angi, joins GOBankingRates to share her tips for successfully saving $500 each month. Here’s how to get started on this savings goal in 2023.
Make a Realistic Budget
While making a budget may sound like a basic tip, Micetich said it’s the first step to a successful year of saving.
“Think about all the different things you regularly spend money on and give yourself reasonable budgets for those items,” Micetich said. “This includes rent and/or mortgage payments, utilities, internet and phone bills, auto payments, insurance and any other regular payments you can expect. Then tackle items like groceries, eating out, holiday and birthday gifts and any other irregular but expected expenses you’ll have throughout the year.”
As you make your budget, Micetich recommends making the amounts for each category realistic and attainable. Those who are too strict may have trouble keeping to their budget. Being too loose, however, can lead to trouble finding the room for saving money.
Stick To Your Grocery Shopping List
Food is one area where it takes some practice to consistently save. Micetich said food is where many regularly go over their budget, whether they’re dining out or ordering at the drive-through more often than planned.
It’s also easy to fall behind on meal prep, which can be a big part of helping you reach your goal of saving $500 each month, or buying whatever looks good at the supermarket instead of focusing on what you actually need at the grocery store. For those working to save $500 each month in 2023, you’ll need to stick to your shopping list. Micetich recommends making a comprehensive shopping list for each week’s meal prep and only buying what’s on the list.
Buy in Bulk
Instead of buying one or two rolls of paper towels, why not make the purchase in bulk? You’ll have paper towels on hand year-round and won’t need to keep running back to the grocery store and paying more money when you start to run out.
For the items you consistently use that do not go bad, Micetich recommends making bulk purchases. This includes items like canned foods or toilet paper. Store them in an organized way in your home so you can find them when you need them.
Factor In Home Costs
Homeowners who want to save an extra $500 a month, or an amount they feel comfortable saving, need to factor in the cost of taking care of their home.
Micetich cites data from Angi’s State of Home Spending Report in which homeowners spent an average of around $8,500 on home improvement, $2,500 on home maintenance and $2,000 on emergency repairs in 2022. She recommends incorporating home costs, both planned and unplanned alike, into your savings goals.
Have a Specific Goal You’re Heading Toward
Micetich said it’s easier to save when you put money toward specific goals because you can envision each dollar saved going toward a much-needed beach vacation, your retirement fund, your child’s college tuition, a new dishwasher or something else you need or want to enjoy.
Can’t Meet This Month’s $500 Goal? Don’t Beat Yourself Up Over It
Life happens. While we may plan our best to save $500 each month, sometimes unexpected expenses creep up or we go over our budget. We might be able to save $400 instead of $500 or we fall short of our goal of being unable to save anything in a particular month.
If this happens, don’t beat yourself up over it. Micetich recommends taking some time to figure out which expenses went over your budget and if it’s likely to happen again.
“If this is your first time making a true budget, it may take a few months to get it right. You may need to adjust a few categories for the next month, increasing some and decreasing others, until you find something that works for you,” Micetich said.
While saving $500 is a great goal for many people, the amount of money you commit to saving does depend on factors like your income level, regular expenses and what you’re saving for. You may find yourself saving $500 each month in 2023 or aiming for a slightly smaller ballpark, like $350, which aligns better with your current financial picture. Find the amount that’s right for your life and begin your journey to savings.
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