Does your money seem to fly out of your hands as quickly as it arrives? You are not alone. Most of us feel that way at some point in our lives.
There is no magic solution to this problem; it just requires a different mindset and habits. To help you along the way, here are ten tips to assist you in growing your personal savings.
- Set Goals – What are you saving for? Building an emergency fund, saving for a down payment on a house, or reversing a trend of increasing debt? Set your goals and make them reasonable – unrealistic goals will just discourage you.
- Make a Plan – Outline a plan to meet your goals, in terms of saving a percentage of your goal by a specific time. If you do not put a time limit to the plan, your goals will always get pushed back to the future.
- Define Needs vs. Wants – This can be difficult but is necessary. If you cannot pay your bills, do you really need a deluxe cable TV package? Deep down, you know which is which.
- Create Budgets and Stick to Them – Assess your income and expenses realistically, and make budgets. If you make weekly or monthly budgets, do not forget about large annual expenses, such as tax bills or insurance payments. Leave room for an occasional treat as you can afford it to avoid getting discouraged. Read our guide on how to create a budget for a more thorough look at this.
- Create a Second Account – It may help to create a second account that serves as your "piggy bank," only to be touched in case of an emergency. With direct deposit, you may be able to have a portion of your paycheck sent to this account. After some time, you may "forget" about it with respect to the daily bills and the temptation to overspend will be reduced.
- Pay Yourself – Treat yourself as if you were just another person to whom you owe money – because in essence, you are. Pay your "bill" to yourself regularly every month, and include that as part of your budget – use direct deposit if you can. Should you miss a "payment," charge yourself a "penalty" to be included in the next month's deposit. All this "pay" should go immediately into some form of investment. These investments can range from low-risk, low-yield savings or money market accounts to more speculative – but typically higher yielding – investments in stocks, bonds, and other classic instruments. Regardless of the investment vehicle, what matters most is that you set this money aside.
- Minimize Withdrawals and Transfers – Even if there are no charges for moving your money around, treat your money as if it were less accessible than it really is. That way you will be less tempted to stop at the ATM for money for impulse purchases.
- Manage Debt – If you have high-interest credit card charges, pay them off as soon as possible. As you pay off a debt, transfer at least some portion of that regular payment you used to make into your savings account to avoid spending temptations. If you want to reduce your interest payments and lower your debt, try the free Debt Optimizer by MoneyTips.
- Take Advantage of Discounts – You do not have to be an extreme couponing hoarder creating unrest at the grocery store, but there is no reason not to take advantage of discounts available to you in anything you purchase. Many wealthy people attain and maintain wealth because they do not pay any more than they have to.
- Minimize Use of Credit – Credit is essential at times, but easy credit also can mean easy overspending. If possible, never charge more to a credit card than you can afford to pay at the end of the month.
Saving is primarily a mindset and an attitude. It will get easier as you practice it on a daily basis, and see the rewards slowly grow – and if you stick with it, eventually you will meet your goal. If your goal is saving for retirement, let the free Retirement Planner by MoneyTips help you calculate when you can retire without jeopardizing your lifestyle.