1. Set a goal: What do you want? How much does it cost? How long do you want to wait to get it? Once you've set an amount and a date, divide this up into smaller goals. For example, if you want to buy a new HDTV next year, you might figure on spending about $1,200 for it. That's $100 a month you would need to put in savings, or if you get paid bi-monthly, $50 each paycheck.
2. Make a budget: Where is that $50 going to come from? Figure out what you spend on everything and eliminate what you don't need.
3. Pay yourself second: Each paycheck, cover all your necessary bills like rent and utilities, and then take out the amount of money you need to reach your goal. Put this money in a safe place where it's not easily accessible, like a bank account or a piggy bank. Think of it as another bill. Buy discretionary expenses using only the money left over.
A few painless alterations may help you reach your goal:
Bank overdrafts, late payments, and credit card interest all cost money while providing no benefits. If you are charged a fee, talk to the company involved: you may get the charge dropped or reduced.
Wait: That hot new electronic gadget you want will be cheaper, and maybe even more functional, if you wait a while after its release to buy it. Clothes are marked down about two months after they're first put on the rack. That little thing you just saw, whatever it may be, will be there tomorrow, and if you wait until then, you may not want it anymore.
Pay as you go vs. subscription: If you use a service rarely, like your cell phone or movies, it may be cheaper to pay for each use. If you use these services often, a subscription may be cheaper.
Posted 4816 day ago