Saving money isn’t always about cutting coupons or going to every sale in town.  In fact saving money is much more about how you think about money in the first place.  What do I mean?  If your family always had you thinking that money was difficult to come by then you are more likely to struggle.  In addition, having sound financial practices in place is essential.

So does changing the way you think about money actually save money?  Well how can you ever expect to have any money if you don’t care what you do with it or how to handle the managing of it.  How many people do you know that spend money as if it was going to never run out?  You may get away with it for awhile but eventually something will come up and you will have to pay the piper so to speak.

Next to consider, Track all of your money for at least thirty days.  Saving money is only possible when you know how much you are losing and where it all goes.  Every single dollar needs to be tracked, a little cumbersome perhaps but well worth it.

Once you know where your money is going it’s time for a budget.  No other tips to save money will help much unless you have one.  The dreaded B-word is the key to your financial health.  Every single dollar is spent on paper before it is even put in the bank.  You will have a category for everything including fun money, savings and an emergency fund.

Now the final step is actually begin to make money.  Once you have all this extra money it will be time to invest.  But first you need to make sure that the extra money you will start having is not wasted away.  You need to set goals about what you want to do with you finances one year, five years, and beyond.  This will determine what you do next with the money you save.

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By learning to budget your money properly, you will also be able to avoid potential financial disasters. If you haven’t tried living on a budget, try out a simplified one for starters and go forward from there. Simply being aware of where your money is going can help you realize how much of your total income goes to various types of expenditures. You may be surprised how much you spend on eating out, shopping, etc.

One of the great advantages we have in the internet world is that we can check our bank statements online. This allows us to see how we spend our money immediately as most online bank services list your bank deposits and withdrawals as soon as they take place.

The first step is to sign up for your online bank option if you have not done so already. You can even print your account history if you like. Go through the previous month statements and see how much money you are spending on the essentials like food and utilities.

You can then see how much you are paying for entertainment, restaurant meals, etc. Then see how much you spend to pay off debt like credit card bills. And of course how much you pay in rent or for your house payment. You now have the money you are spending per month.

Now take a look at how to budget daily expenses how much you spend per day on these items. Then compare that to how much you bring in, your income. Now if you want to save more money start cutting out areas of spending where you will not miss it like in entertainment or eating out. With some day to day expenses like car maintenance and fuel you can try taking the bus, or simply limiting your driving miles to save money. With other regular expenses like food, health and beauty products or clothing, you can cut costs by taking advantage of buy one get one free meal coupons, trying free makeup samples, waiting for clothing sales, or simply trying less expensive versions of your usual products.

The effort you take to create a budget, live within it, and stick to it over time will help you avoid financial problems down the road. You’ll also be able to reach long term goals more quickly my making small changes in your day to day spending habits.

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These wealthy people:

1.  Know how to live well below their means.  They don’t live right to the edge of their paycheck/earnings.

2.  They care more about financial independence and a lot less about how others perceive them (i.e. their social status.

3.  They use their time and resources wisely in ways that help them build more wealth.

Right now I just want to focus on numbers one and three.

It’s age-old wisdom that you should live within your means.  Everyone knows they should do it — but nobody does it!  The key is to establish a system whereby you can monitor your inflow, set up a plan, and monitor your outflows.  Most would quickly try budget software, and that’s a wise idea.  Instead of busting out the three-decade old ledger sheets, just set up some software to track money that comes in, what you want to do with that money (that’s the budgeting part) and money going out (what you did with the money).

That’s it.  If you’re dutifully recording your inflows, your plan, and your outflows, you won’t plan to spend more money than you make and you’ll be living within your means.

The third characteristic: spending time doing things that are conducive to building wealth.  Well having a sound plan (again, perhaps implementing some budgeting software) is right up there as numero uno in importance.  If you don’t have a well-laid plan, you’re not going to reach your goal snad you’re not going to be spending the time doing those things that will help you build real, lasting wealth.

It may seem counterintuitive that wealthy people would spend time budgeting — but they do.  In fact, 87% of millionaires have a budget that they actively refer to!  You’d probably say that millionaires don’t NEED a budget because they already have plenty of money.  However, their budget is what helped them achieve their wealth and they certainly wouldn’t want to abandon the very thing that helped them get where they are today!

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