You can save money by earning more and having more to save. Or you can spend less. Hand-in-hand with each of these is making lifestyle changes to improve your savings rate. However, not all lifestyle changes are applicable or practical for everyone.
First you have to know where you are spending. Break down your expenses by fixed and variable costs. Doing this helps to view everything as either in your control or out of it.
– Take care of your fixed
expense
– Invest consistently
where you feel
comfortable (the
amount depends on
your budget)
– Save for retirement
– Save into your
emergency fund for a
rainy day (at least 6
months' worth)
Get into the mindset that you control your spending, and whenever you do spend money you should do everything possible to get the most bang for your buck.
Lifestyle inflation is one of the worst thing you can do to your expenses. Ignore your neighbors and instead focus on your own needs, expenses, and financial situation.
When you plan an evening out on the town or go out to eat, look for and attend happy hours, and look for discount events so that you don't have to pay full price for those drinks.