The ABCs of Saving Money
Saving money is something everyone wants to achieve, but few find it easy to do. Building up your savings is one of the most common New Years’ resolutions. It’s part of the homeowner dream, a way to feel financially secure, and a rainy-day fund for emergencies or vacations in the future. But to get there, first you need to actually build that savings.
Getting started is easy, sticking with it is the hard part. As with all life changes, it’s important to start small and take it slow. Fortunately, there are a few simple steps that anyone can take to start saving – and keep saving – to establish that little nest egg. All you need are your A, B, Cs.
Let’s dive into the ABCs of how to save money with simple strategies that will last in the long-term.
A) Set Your Savings Goal
A is for Always have a savings goal. Start with just one goal – the amount you want to save. You might have a reason, like saving up for a house or building up enough for a big vacation. These goals can be meaningful and motivating. When you think about the little starter house you’re saving up for, it becomes easier to save. When you can see that your savings are getting closer to a real numerical goal, you can reward yourself emotionally for getting closer to that goal every month. Any savings goal is achievable when you keep your goals in sight.
It can also help to set a smaller goal to start with. Consider something moderately expensive you want to buy, or a small trip you want to take. Reaching a small goal will motivate you to keep saving and to believe in your ability to save for bigger goals in the future.
B) Save to an Account Just for Saving
B is for Bank account dedicated to your savings. Open a special savings account just for your savings. There are two important reasons to do this. First, automatic withdrawals and subscription charges can’t reach your savings goal, which means your money stays saved no matter what. Second, you won’t be tempted to spend it because it’s “right there” adding to the number in your normal bank account.
When your savings has a special place, you can see the amount go up every time you transfer funds from your checking to your savings account. You can also make more accurate and easy budget calculations based on your income-spending balance without your savings amount making your budget seem bigger (and your savings seem smaller).
C) Build a Habit of Saving on a Schedule
C is for Continuing to save on a regular schedule to build that savings habit. Habits are things you do automatically because you have done them so many times before. By building a habit of savings, you’ll find it easier to set that money aside (and calculate your budget for savings) with every month that passes. The smartest choice is to take your savings “off the top” with each paycheck.
Decide how much you’re going to save each month, and put it aside as soon as you get paid. Even if you only save a small amount from each payday, your savings will go up every single month, no times skipped, and you’ll build a habit of saving reliably to see your nest egg continue to grow.
D) Get Rid of Expenses You Don’t Need
D is for things you Don’t need to spend on, especially old subscriptions you may not realize are still charging a monthly fee. In the age of streaming and online services, most people have somewhere between two and ten accounts they don’t realize are still charging a monthly service. How many streaming services are you subscribed to? When was the last time you ordered Postmates or Doordash? When the heck did you sign up for that magazine subscription?
Use an online service (Mint is a good choice) to help you comb through your finances and weed out those extra drains on your income. You could be adding up to $50 (or more!) extra dollars a month to your budget and/or savings every month with this simple tactic.
E) Reward Yourself for Spending Less
E is for Enjoying the life you build while saving. When most people start saving, they start seeing opportunities not to spend all over the place. You cook at home instead of going out. You skip the expensive new shirt because you’ve still got nice shirts at home. But don’t short yourself too much while finding ways to avoid expenses. If you start to feel stressed out or like life is losing its color, don’t forget to reward yourself for all that successful saving so far.
Consider a few little treats that make life worth living. When you’re saving at the grocery store, grab a quart of ice cream or a roll of cookie dough – affordable yet delicious rewards for smart shopping. Catch a movie on the one streaming service that you chose to keep. You’ll actually build your savings with more enthusiasm when you treat yourself – even just a little – along the way.
F) Save the Money You Don’t Spend
F is for Fast transfers to reward yourself for every smart financial decision. When you do reduce your costs by shopping smart, eliminating expenses, and buying less; deposit those savings right away. Make sure the money you save gets into your savings account. Do the calculations on how much you saved in the moment, then make a note, set a reminder, or make the transfer immediately on your phone from checking to savings. That’s money you successfully didn’t spend today. And with a quick transfer, it’s money that you won’t spend tomorrow either. Instead, you get to see your nest egg grow with every smart financial decision you make.
G) Consolidate Your Debts
G is for Getting rid of extra debt burden to help you save. Explore your options to reduce your debt or consolidate it into a lower monthly payment. Multiple debt payments can really stack up against your budget and your ability to save.
Kosters Cash Loans is here to make your finances easier and bring your financial goals within reach. Contact us today to explore your options to reach your savings goals.
