While all of us want and need to save money, most people find it hard to do so. Many blame the high cost of living and low salary, but there are also those who don’t care and practice a YOLO lifestyle. Regardless of your excuse, it is important to take note that not saving can have huge consequences in the future. Financial stress can be burdensome and negatively affect your mental health.
There’s no better time to develop a saving habit than now. If you have been overpowered by your excuses before, it is now the time to think about your money and spending habits and make changes for your financial future. Below are a few steps to take to get started with saving.
Evaluate your spending
Take inventory of your accounts, as well as the credit cards you have to get a sense of what’s coming out from your monthly cash flow. Be sure to track all your expenses, including your coffee/drink purchases, snacks, and even cash tips. Then, group your spending into fixed expenses (bills, debt payments, insurance) and variable expenses (clothing, food, travel).
By doing so, you are likely to find wiggle room or even extra money to save from your variable expenses. It is also a good idea to use a free-spending tracking app or program to help you with money management. Check out this link for the list of budget apps that can help save and monitor your money.
Decide on what you want to save for and set a goal. It could be for a house down payment, wedding, much-needed vacation, or retirement. Decide on the amount to put out and figure out how long it might take you to reach the money you need. Your saving goals could be short-term or long-term.
Short-term goals could take about one to three years to complete and are mostly dedicated for down payments on a car, wedding plans, or emergency fund. Long-term ones, meanwhile, could take four years more and are dedicated to retirement, house remodeling projects, and your kid’s college education.
Automate your savings
If you’re always tempted to spend your extra money on unnecessary things, consider making your savings automatic. You can direct the money into your savings, retirement, or investment accounts. Decide on the amount you want and are comfortable enough to save each month and set up automatic transfers from a checking to a savings account.
Most banks provide automated transfers, but be sure to check your bank’s fees, rules, and policies for this kind of arrangement. The best part about this is that you can grow your savings or net worth with virtually little effort. You can also choose to automate your bill payments for gas, water, electricity, credits cards, and even home loans.
Find ways to cut your expenses
Are your expenses preventing you from reaching your financial goals? If you can’t save because of your monthly spending, it is probably the time to cut back. See (or create) a record of your expenses and identify the things that you can give up or spend less on. Do you really need a new blouse monthly or dine out every week? Decide on where to make some cuts and follow through with it.
Here are a few tips for cutting unnecessary spending:
Cook or make meals at home.
Make a list before shopping or going to the grocery store. Cancel club/gym memberships or entertainment subscriptions that you don’t regularly use. Use a budgeting app to track your expenses. Reduce energy use (like hanging out the clothes to dry, turning down the thermostat, or switching to energy-efficient light bulbs).
Slow and steady wins the race
Saving little amounts each month may seem not to make a difference, especially when saving for a house, vacation, or a sizable retirement plan. The truth is, however, you can yield benefits in the future, even with small changes. By committing and working towards your goals gradually, you can set yourself up for financial success.
Besides, you can always increase the amount you put on each month depending on your financial situation. If you, for instance, cancel a subscription or downgrade a phone plan, you can put those extra dollars into your savings.
By developing this into a habit, saving will become much easier, and it won’t feel like a burden anymore. Start now and yield benefits you will enjoy in the future.