Most finance gurus tell you to “save, save, save!” But let’s be honest—saving can feel nearly impossible. What to do before saving money is often overlooked, yet it’s a crucial first step to getting the sequence right and making saving more effective.
Here’s the thing: saving money isn’t just about willpower; it’s about having the means to save. If your financial situation leaves you with nothing left after paying bills and basic needs, how can you save?
Money doesn’t appear out of thin air, and you can’t save what you don’t have.
It’s simple logic. Saving money and achieving financial freedom follow a logical, unspoken sequence. So, what comes first before saving money? Let’s break it down:
Consider Getting Another Job
If you’re reading this, chances are you’re struggling financially—just like I was more than a decade ago. And you know very well that if there’s no money coming in, there’s nothing to save.
And if your current job isn’t cutting it, it’s time to be honest with yourself.
You have two options: either find a better job or add another source of income. While switching jobs entirely can be risky—especially in today’s economy—picking up a second job or a side hustle is often a more manageable and practical solution.
Luckily, there are plenty of opportunities out there. The key is to find something that fits your schedule and leverages your skills without burning you out.
Take small steps—start with a weekend gig or dedicate a few hours after work. Even a modest increase in income can make a big difference over time.
If you’re looking for detailed tips and recommendations, check out other posts on this site—I’ve covered plenty of side hustle ideas to help you get started! Once you get to earn a bit more, deal with your debt.
Deal With Your Debt
Debt doesn’t have to be a lifelong burden. While some debt can be a normal part of life—like a mortgage or student loans—overwhelming, crippling debt doesn’t have to be.
One of the things in your what to do before saving money list is to tackle the most critical aspect of your finances: your debt.
Why is this step so important? Because debt, especially high-interest debt, is like a financial black hole. It eats away at your income and makes it harder to build an emergency fund, pay for insurance, or invest in your future.
To start, assess your debt, prioritize payments, consolidate, negotiate, and avoid incurring new debts. Once your debt is under control—or eliminated—you’ll free up money to start building your emergency fund and paying for more comprehensive insurance.
Remember, dealing with debt isn’t easy, but it’s a crucial step. Once you’re out from under its weight, saving and building financial stability will become so much easier.
However, clearing your critical debts can take some time, so what you can do is scrounge and downsize to expedite your debt payment.
Downsize And Let Go
We live in a world where corporations thrive on subscription models designed to quietly siphon your money.
Automatic renewals, active subscriptions, and tricky manual cancellations are all part of their strategy to keep you paying—often for things you don’t even use. These “small” monthly charges can silently pile up and wreak havoc on your budget if you’re not careful.
To regain control of your finances, it’s time to downsize and let go of what you don’t need.
Start by reviewing your bank and credit card statements to identify all active subscriptions. Take note of every recurring charge, no matter how small. If you don’t use the service or the cost is unjust, cancel.
Forget the “I might use it someday” excuse. If you’re not using it now, it’s draining your wallet without providing any benefit. Cancel it today. And don’t worry—if you truly need it later, you can always reactivate it.
For subscriptions you can’t let go of, explore alternatives that offer one-time purchases or lifetime licenses. For instance, many software programs and tools now provide these options, saving you money over the long term.
Lastly, for any subscriptions you keep and can’t find alternatives, disable auto-renewals. This forces you to consciously decide whether to renew instead of passively letting charges pile up.
Do you know what type of subscriptions that’s also taking a lot of your money? Insurance. So, let’s talk about that.
Get Your Insurance Plans In Line
Before insurance became commonplace, people had to rely solely on their emergency funds to cover life’s unexpected disasters. Thankfully, we now have insurance to provide a layer of financial protection.
But let’s be honest—while insurance offers peace of mind on paper, getting it to actually cover your needs can sometimes be tricky.
That’s why it’s essential to get your insurance plans in order.
Review your current policies and make sure you’re paying the right premiums for the coverage you need. Are you underinsured? Overpaying for coverage you don’t use? If so, it’s time to shop around and compare policies.
Once you’re done with insurance plans, you can go ahead and build your emergency fund next.
Prioritize Your Emergency Fund
With the previous sections, if you follow them, you’ll have the opportunity to save money sooner or later. However, before you start planning for your distant future, focus on your near future.
Life happens—unexpected events can hit anyone, and no one is exempt. Emergencies are unpredictable and often unavoidable.
That’s why, before you think about retirement or building wealth, you need to protect yourself against the unexpected. The first step? Build your emergency fund.
Start by deciding how much you need and how quickly you want to save it. A common guideline is to calculate your average monthly expenses and aim for an emergency fund that covers at least three to six months of those expenses.
This cushion will give you financial breathing room when life throws you a curveball.
Conclusion
Once you’ve worked through these steps—dealing with debt, downsizing unnecessary expenses, securing insurance, and possibly increasing your income—you’ll find yourself with the freedom to start saving effectively.
At this point, you can focus on building a solid savings plan that will help secure your future and retirement.
Remember, this isn’t groundbreaking advice—it’s common sense! To save money, you need to have money to save.
These steps are designed to give you the breathing room you need to start stashing cash for emergencies, big goals, and financial freedom.
Saving may feel overwhelming at first, but by tackling the basics step by step, you’re setting yourself up for long-term success. You’ve got this.
But don’t stop there! Be sure to watch and listen to financial insights on our YouTube Channel. Keep learning to reach financial freedom!
