Finding Success at Saving Money
For some people saving money seems easy. For others, it's hard work. Our culture celebrates shopping, not saving for a rainy day. Still, saving is important and makes a very real difference in your financial future. Financial icon Dave Ramsey advocates accumulating a $1,000 emergency fund as the first step towards financial security.
Having trouble putting away as much money as you’d like? Try some tips I’ve learned to making saving easier.
Pay Yourself First
It's a common savings rule - “Pay Yourself First.” It means setting aside funds for your personal savings —before you pay your bills, shop for groceries or enjoy a night out. It’s hard to save money after bills and other expenses are paid. Savings needs to be a priority and paying yourself first makes sure it gets done.
Make it a Habit
Treat savings like any other “bill” to get into the "savings mindset." Put savings on autopilot by having your paycheck or a portion of it direct deposited, or set up an automatic transfer in Online banking each time you get paid. Out of sight, out of mind. If you don’t see it, you won’t think about spending it.
Set a Goal
Many of us do better when we have goals. Start by breaking your end goal into achievable, smaller goals, and then celebrate those smaller goals. For example, your ultimate goal may be saving $2,500. Go out for ice cream or treat yourself to that Venti specialty coffee from your favorite barista for every $250 you accumulate. Because those are the kinds of things you cut back on when you're trying to start a new savings habit. (Make certain your splurge doesn't use your hard won savings)!
Make it Painful to Touch It
Once you see savings accumulate, your old spending habits may come back. Something will break down, the kids will need money for a field trip, or you’ll see an amazing outfit on sale. Make it a challenge to get at your savings. Consider opening a separate account without debit or check access, or put your savings into a certificate with a penalty for early withdrawal. Find a way to put a “lock” on your savings until you've built the habit of not touching those funds for other than the intended plan. Some people even put all their credit cards into a container filled with water, and put it in the freezer. Gives you plenty of time to rethink that purchase while you're waiting for your cards to thaw!
Stop the Madness
The final component to successful savings is to change your spending habits. In the past, I saved money, but spent the same amount (or more) with plastic. Using plastic can be a tough habit to break. However, savings is a good habit to get into. Once your savings build, you’ll begin to view spending from that perspective: that jacket is a “weeks' worth of savings” or that trip is equal to “two months’ worth of savings.” It makes you think when you know how hard you worked to build that savings. Best of all, over time, you'll view savings in the same way you used to view spending, something to be happy about. Especially when those savings help you achieve other big goals.
For most of us, saving money doesn't come naturally. Just remember:
- Don’t get discouraged
- Don't give up
You too can be on the way to sound savings habits!
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