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Want to Build Your Savings? Follow Our Ultimate Step-by-Step Guide

  • March 30, 2019
  • 1:11 am

By Mike Brassfield

Take a moment. Think about being your best self — living your best life.

What do you really want to do with your life? Raise a happy family? Travel the world? Buy a nice house? Start your own business?

Reality check: To accomplish any of those things, you’re going to need to save money.

Unfortunately, Americans are bad at saving money, and we’re getting worse. Thanks to rising costs, stagnant salaries and student loan debt, we’re saving less than ever.

Here Are Our Best Tips to Save Money
Are you ready to actually start saving? What you’re reading is a step-by-step guide on how to do it — how to come up with savings strategies, choose a budgeting method, pick the right financial institution, automate your finances and live a budget-conscious lifestyle.

Pour yourself a cup of coffee and buckle up. It’s time to get serious about this.

Step 1: Develop Savings Goals and Strategies

You’re probably asking yourself, “How much should I save?”

Your first move is to set specific savings goals for yourself — emphasis on specific. Naming your goals will make them more real to you. It’ll help you resist the temptation to spend your money on other stuff.

Think Long Term and Short Term
What exactly do you want to save money for? How much will you need to save? And what do you need to save for first? Think short- and long-term:

Short-term: Save for a real vacation or nice holiday gifts. But first, save enough to have a decent emergency fund — three to six months’ worth of living expenses, in case you run into an unexpected car-repair bill or lose your job, for example.
Long-term: This involves big-picture thinking. Here, you’re saving for things like your children’s college fund or for your retirement plan.
Analyze Your Income
How much can you realistically save for these goals, now that you’re making them a priority?

Write down your income and expenses — all of your expenses, from utility bills to your Netflix subscription. Don’t forget your student loans or credit card debt. You need to know what you’re spending in every budget category. Pay special attention to what you’re spending on non-essentials, such as eating out.

An easy way to automate this process is to use Trim, a little bot that’ll keep track of all your transactions.

Connect your checking account, credit card and savings account for a big-picture look at your spending habits. Then, take a closer look by checking out each of your transactions. Set alerts that’ll let you know when bills are due, when you’ve hit a spending cap or when you’ve (hopefully not) overdrafted. This will help you stick with your savings plan.

Check in on Your Credit
Do your own credit check. Keeping tabs on your credit score and your credit reports can help guide you to a financially healthier life — especially if you use a free credit-monitoring service like Credit Sesame. It gives you personalized suggestions for improving your credit.

The better your credit, the better off you’ll be when you’re getting a home or car loan. Credit Sesame can estimate how big a mortgage you might qualify for, for example.

Step 2: Pick Budgeting and Debt Repayment Methods

It’s time to start making a monthly budget and sticking to it — especially if you have debt.

This way, you can put savings right into your budget. It’s never an afterthought.

Here are five different budgeting methods. We can’t tell you which one to choose. Be honest with yourself, and choose the one you think is most likely to work for you. This is how you save money on a tight budget.

The 50/30/20 Rule
This one was popularized by U.S. Sen. Elizabeth Warren, a bankruptcy expert, and her business-executive daughter Amelia Warren Tyagi.

Split your income into three spending categories: 50% goes to essential bills and monthly expenses, 20% toward financial goals and 30% to personal spending (all the stuff you like to spend money on but don’t really need). Put the money earmarked for your financial goals into a separate savings account.

Read More: https://www.thepennyhoarder.com/smart-money/how-to-save-money/?aff_id=122&aff_sub2=seo-hp-block-1

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