In a perfect world it’d be easy to save money. No wait, in a perfect world, you wouldn’t need to save money. You’d automatically have a big fat savings account at the bank in your name, without any effort. But alas, we don’t get that.
Everyone needs to start a savings account, but if you’re like most people, you spend your time, and your money, playing catch up and trying to stay out of debt instead. When your life is like that, saving money can almost be considered a luxury. But as it often is with goals, if you can get a head start and get some momentum going, it’s much easier to follow through. The following steps will help you kick-start your savings plan and get the momentum you need to achieve your financial savings goals.
Set Your Goals
Before you get started, establish a savings goal and a purpose for your savings. You may have several savings goals. For example, you may have a long-term saving goal for retirement and a short-term goal for a tropical vacation. If necessary, focus on one goal at a time. I once set up a separate savings account for a possible strike at the company where I worked. The strike didn’t happen, and I had $1000 set aside for it. I have continued to add to that account to this day. Get that savings account growing and on track before you shift your focus to the next goal.
Find Out Where Your Money Goes
You probably know how much you earn and the amount of your major expenses. However, you may not be aware of all of the smaller expenses – the ones that can slowly deplete your bank account. Track your spending for a month. List every single expense, including those coffee drinks you purchase from time to time. Include every single expense no matter how small. At the end of the month, total the spending in terms of categories.
Use Your Information to Create a Budget
Now use your month of expense tracking information to create a budget. This may sound tedious, and it kind of is; however, it will help you control your money. This is the first step to being able to truly achieve a solid savings plan. You have the information you need to know where you can cut back your spending and thus save more money. Add a savings category to your budget and start automating your savings.
Save Those Financial Windfalls
I know you want to spend it on something special, but any financial windfalls you receive need to go straight into your savings account. This is where you’ll really start to gather that momentum discussed earlier. If you receive a tax return, put it in savings. If you earn a bit of overtime, put it in savings. If you win $20 with a lottery ticket, put it in savings. If you find a ten-dollar bill in your pocket when you’re doing the laundry, put it into savings.
Finally, keep tabs on your savings and watch it grow. This step is motivating because it gives you a sense of accomplishment. Whether you’re able to save five dollars a week or a thousand dollars a week, the point is to start saving. Start now!