Constantly saving money to reach financial goals requires a lot of discipline and perseverance, of course, in addition to hard work.
In fact, a survey last year revealed that very few people have emergency savings, and even fewer have at least three months’ worth of savings.
So if you are part of that minority, congratulations! That means that you are setting aside money on a regular basis, and that is a very important basis for a more secure financial future. You may not need this article, but maybe you can find an even better way to save and achieve your goals.
Also read: 4 Ways to Save on Electricity Bills
These five strategies will help you adopt saving habits to get even better.
Strategy # 1: Always save, instead of “what is left over”
Although you have an idea of saving, you only do it after paying the bills and doing some “fun” shopping. The problem with this strategy is that since you feel confident in this balance, you can go out to eat for a few more days or go to a movie, and at the end of the month, there is nothing left to save. It can also be more difficult to set savings goals because you probably don’t know how much money you spend on a fixed basis each month, and how much is spent on a variable basis.
Try this instead: Think of it this way: “The first account you have to pay each month is the savings account.” Figure out how much you want to save each month, and “pay off” that bill by putting the money away, separate from the money you have to pay for other things and spend.
You can simply create an automatic transfer from your checking account to your savings account, for example at the beginning of each month. If you “set it and forget it,” it may surprise you the next time you view your account.
If the money comes to you in cash, it barely arrives, separate the amount that is going to be to save and keep it in a safe place.
Strategy #2: “Determine what savings are for what”
Many people save all the money together, in a big pot at an impressive rate. It is very good to see the account grow quickly, especially when there are many goals on how to spend the money.
For example, if your emergency fund is mixed with your savings to make a down payment on a house, you could easily deplete your emergency fund when it comes time to purchase the property. Likewise, if your child’s college savings are there too, it can lead to a misconception about how much money you’ve saved because you’ve mentally allocated that money twice.
Try this instead: Create sub-accounts for each financial goal you have, and you’ll have a more realistic view of your savings progress. You can have emergency savings, a down payment on a house or a future vacation.
Strategy #3: “Save small amounts on a regular basis instead of large amounts every once in a while”
Many people only save large amounts of money when they receive a windfall or when they feel they can afford it. The problem with this is that since it is not constant, it is more difficult to determine when the goals will be achieved. And you also miss the opportunity to review expenses to see if you can really save every month, even if it’s $50.
Try this instead: Make an actual budget to understand how much you have to save each month instead of guessing. And you can do the same for windfall earnings: Decide what specific percentage of that money will always be transferred to a savings account.
Choose a savings goal that is sustainable and that you can stick to every month. Then if you think you can save a little more, you adjust it.
Strategy #4: “Give yourself some treats”
When saving is the priority, sometimes we go overboard and reach an almost obsessive limit point. Perhaps you are so intent on increasing the savings that you ignore other financial priorities, depriving yourself of occasional spending on yourself, your happiness and your health.
Try this instead: Make sure you’re not saving at the expense of other goals, like paying off credit card or student loan debt. Although if you really don’t have any savings, a good idea would be to give up all other goals until you have at least one month of spending in the savings account. And don’t forget to spend on something nice from time to time, like a new purse or dinner with your significant other, knowing you can afford it.