I like to begin each year with a series of goal setting activities and one of those goals which I began last year is saving more money.
In the current age of spending it is very rare that people talk about saving. This is because factors such as lack of residual income, knowledge and discipline make it difficult to start saving. Based on my knowledge and personal experience, I’ve created a list of ten tips to help you painlessly grow your savings in 2016.
1. Do Create Additional Income
This is clearly obvious but the best way to save without going broke is by increasing your income. You can monetize your hobbies by selling something from your craft on etsy or offering a service that you specialize in for a charge.
But additional income is not possible for everyone so continue reading for tips that don’t involve making more money.
2. Don’t Start Without a Budget
Saving is only possible if you know how much to save and this requires a budget of some sort. The best budget is one you can see and not the one in your head. This makes it easier to see where your money is going and where it shouldn’t be but is. Take advantage of this.
Play around to see which combination of expense allocation works best for your savings goal. Then follow through via changes in your lifestyle.
You can get started here with this Simple Interactive Budget.
3. Do Work on Minimizing Your Expenses
It is unfortunate but not many of us are left with residual income after taking care of all our expenses so some things have to be sacrificed.Food is one of the biggest controllable expenses in many households so start by planning your trips to the grocery store because random trips to the store add up very quickly.
Turn off the TV every once in a while. Take advantage of free online steaming and paid subscription services to get rid of cable bills. Home phones are now antiques and Wi-fi makes unlimited cell phone data plans unnecessary.
Many of these things are conveniences of life that we love but can certainly do without.
4. Don’t Neglect your Credit Card
Kill two birds with one stone by using your credit card. Use it to buy budgeted necessities like food or gas (not bills that are to the be paid to a company). Pay off three-quarters of your bill using the money you budgeted for those expenses and save the remaining amount.
This creates leverage by freeing up your expenses so that you can save a bit more. It also helps you develop a habit of making timely monthly payments which plays a role in increasing your credit score.
Be sure to spend responsibly by keeping your credit usage under 10% of your credit limit which is the optimal ratio for your credit score.
5. Do Research Savings Account Options
Many checking accounts come with savings account options that can slowly but easily help you reach your savings goal. For example, I bank with Wells Fargo which allows (forces) you to either make a monthly $25 deposit to avoid penalties on your savings account or automatically transfer one dollar for every debit (spending) transaction on your account.
Look into your bank’s savings account options for small withdrawal options that you won’t miss.
6. Don’t Start Without Setting a Savings Goal
After researching your savings options, reducing your expenses, and seeing what works best for your budget, it is time to create a realistic goal. Start by asking yourself is there any way to lower my savings goal? For example, maybe staying in a lower rated hotel for your vacation or buying an older version of the car you want.
Research and exhaust all avenues that make it possible for you to stretch your money as well as create a more realistic savings goal, After doing this settle on a savings amount.
7. Do Reflect and Re-balance
Since our expenses usually do not stay constant neither can our budget and as such our savings goal sometimes need adjustment.
As you begin to save regularly you will definitely know if you’ve settled into your new financial lifestyle. If you have not and you find saving particularly straining, the easy solution is to reevaluate your goal and re-budget.
Be flexible and adjust as needed.
8. Don’t Stop Trying
Depending on what your savings goal is it might seem like it’s taking forever to get there but think about this: we spend hours working day in and day out only to end up paying everything and everyone but ourselves. You are your biggest investment so no matter how small the amount is, do something for you by paying yourself first!
Your pennies will eventually grow to become dollars and regardless of the struggle, saved money is never a loss.You are your biggest investment so do something for you by paying yourself first! Click To Tweet
9. Do Resist the Urge to Dip into Your Savings
So you’ve tried to developed a habit of saving but in real life things do not always go as planned so you’re tempted to withdraw from your savings.It takes a lot of discipline to save in the first place and it takes even more discipline to say I have so many expenses that wouldn’t be a problem if I didn’t have to save but I’m still going to put something away this month. It never gets easier but it feels good when you can prioritize saving.
Creating an emergency savings fund (hint: try step 5) will reduce the stress of random expenses that always seem to appear every month.
10. Don’t Leave Your Money Unattended
Once you’ve become more efficient at saving, it’s time start making your money work. On average, US savings accounts accumulate less than 0.001% – 0.005% in interest each year. So at best your $5,000 can only earn $25 in interest after going a year untouched.
With that being said, investing is an excellent alternative that creates wealth in the long run. This doesn’t mean you have to become a stock market watching guru – unless of course you’re being paid to do or want to. There are trained professionals whose jobs are to create an ideal portfolio for you based on your lifestyle, goals, and level of risk aversion.
While these professionals do need to paid for their services, just think of them as nannies who get paid to watch your money while you focus on other things as your investment grows to become wealth.On average, US savings accounts accumulate less than 0.001% - 0.005% in interest each year. Click To Tweet
Although this is not a comprehensive list, these few tips helped me tremendously as I began taking saving seriously and they can help you grow your savings painlessly as well. No matter how much you are trying to save always remember that saving is a continuous process of starting, sometimes falling short, and re-strategizing but never ceasing to push forward.
Since this is my first post feel free to say hello and let me know what what are some of your financial goals this year!