Regardless of your financial situation, a common goal of many people is to save more money. Sure, it’s easy to do when your income heavily outweighs your expenses…but what about the college students who don’t have time to work? Those new to the workforce with a low income? Or those more established in the career but still paying off debt?

Saving money is a difficult concept to master, especially when the cost of living continues to increase. When you can’t afford to save money, you can’t afford to lose it either. Be smart with your financial decisions and always plan ahead. Here are my two cents on how to save money on a tight budget:

Assess your financial situation. Gather your documents and determine where you stand financially. Make a list of any income you have coming in, and any expenses going out. In addition, make sure you’re fully aware of any debt. That includes credit card debt, student loans, personal loans, medical loans, etc.

Set goals. Once you’re aware of your financial situation, you can start to set a goal for where you’d like to be down the road. Set a short-term goal (1 year) as well as more long-term goals (3-5 years, 6-10 years). Make sure the goals you set for yourself are specific and attainable: you’re not going to pay off 20 years of debt in 2, but you might be able to do it in 10.

Make a budget. Utilizing your lists from the assessment, come up with a budget that fits your monthly needs. Microsoft Excel has great templates you can use as a basis. Each source of income and expenses should have its own line item. Most importantly, make sure you include everything. Income should include money coming in from a job and/or freelance work. Expenses should include your rent/mortgage, groceries, car expenses, insurance, loans and other debt...in addition to all bills including electric, water, heat, cell phone, car payments, etc. Always include a category for entertainment, and allocate a good portion of your income to it (as much as we hate to admit it, we spend a lot of money in this category).

Important Note: always overestimate when making a budget. It’s better to have more money left in your bank account than not enough to cover your expenses.

Keep track of spending. After your budget is created, keep it top of mind. When you start tracking your expenses, you have a better idea of where your income is allocated. In turn, you’ll recognize which areas you can cut back in, and which ones may need more financial attention than others.

Utilize two savings accounts. This doesn’t help you save more efficiently, but rather spend less frequently.

• In one bank account, hold a savings and a checking account. This is where all of your money should be held. Keep the “entertainment” expense funds in the savings account, and all other expenses in the checking account. These accounts will be the source for any bills coming out, as well as any “savings” in the form of dining out, shopping, vacations, weddings, etc.
• In addition, once a month, transfer a set amount of money into another savings account (I recommend using a credit union for better interest rates). This should be your DO NOT TOUCH account or your emergency fund. It is recommended you keep 3-6 months’ worth of living expenses in this fund; to be stored for events such as a recession, a layoff, or simply having an unsteady income.

Eliminate Unnecessary Costs. Now that you’re aware of your financial situation and you’ve created (and tracked) your budget – look at areas you can cut back. Do you really need 180+ channels in your cable network? Or that Spotify account on auto-renewal? What about that Starbucks Caramel Macchiato you pick up every Monday and Friday? These are small expenses in real-time, but they add up long-term.

• $50 a month for cable is $600 at the end of the year
• $10 a week in coffee is $520 at the end of the year
• $30 in subscriptions each month is $360 at the end of the year

The end of year total for all three of these “necessities” is $1,480 – money you could have spent paying off debt or saving in your emergency fund.

Meal Plan. Groceries are expensive, but it’s not one of the areas we can really cut back. What we can do is spend smarter. When you meal plan, you lay out each item you’ll need for the week. That way, when you’re pushing your cart down each aisle at the store…you know exactly what you’re looking for. The temptation will still be there, but at least you’re not throwing items in your cart you “think” you might use that week.

Splurge. Yes, I said splurge. This is an article on saving money, but in some areas in life, you need to spend a little to save a little. It includes spending slightly more money on those long-term items such as vehicles and homes. You might be spending more upfront, but purchasing a nicer vehicle will save you repair costs in the future. If you purchase a more expensive home, you’re building equity.

This concept fits perfectly with the phrase, “it’s expensive to be poor.” When you can’t afford a solid vehicle, you end up putting more money into it. When you can’t afford tuition (who really can), you end up paying more in interest than you originally borrowed. It is expensive to be poor, and these are just a few examples.

Saving money is by no means an easy practice. It requires planning, it requires discipline, and it requires more planning. Revisit your budget a couple of times each year to make sure the strategy you laid out still makes sense. Don’t get caught up signing off on non-necessities, and reconsider the small purchases that will only satisfy your short-term needs. Most importantly, remember the goals you set for yourself. Follow these pieces of advice and you’re on your way to smart money management.