# How to Calculate Net Savings

Even small savings can add up.
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No matter how much or how little you earn, it is important to save money wherever and whenever you can. While cutting back and saving money is important, it is just as important to keep track of how you are doing. Tracking your progress will make it easier to see where your money-saving plan is working and, just as importantly, where it is falling short. That will allow you to make adjustments as you go and save even more money down the road.

## Step 1

Find your latest pay stub and use it to calculate your monthly net income. For instance, if you are paid twice a month and your take home pay is \$700, your monthly net income would be \$1,400.

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## Step 2

Pull out all of your monthly bills and add them up. Include all regular monthly bills. Examples include rent or mortgage payments, phone bills and cable TV bills.

## Step 3

Subtract the total of your monthly expenses from your net income. This is your total disposable income.

## Step 4

Carry a small notebook or tablet with you each day and use it to record the amount of money you spend on discretionary items. These items can include lunches and dinners out, your daily cup of coffee and impulse purchases.

## Step 5

Subtract the total of your discretionary purchases from the disposable income you calculated in Step 3. This is your net savings--the amount you have left over after all regular bills and other monthly spending.

#### Tip

Motivate yourself to save more by using a calculator that shows how small cutbacks can yield big savings.

#### Things You'll Need

• Paystub

• Monthly bills

• Checkbook