From Emily Rienhardt, blogger for Mid American's Money Matters finance blog
We all have different reasons to save our money, and we all have different amounts of money we need to be saving. If you’re walking through life without a solid savings goal or a savings plan (or without savings at all!), now is as good a time as ever to get yourself ready to build your savings. The best way to start (when you don’t know where to start) is to create your top savings goal.
Your savings goal is going to be different than your mom’s and different than your best friend’s goals, but the beauty is, you get to build it. You get to set your parameters, and the best part…you get to build your wealth!
Step one: What are you saving for? What is your savings goal?
Sometimes the goal is just building a general savings, sometimes you’re saving for something. Identify your true motivations for your desired savings. People who set a real, attainable savings goal save faster and save more each year than people who don’t! Try to be as specific as you can, if your goal is just to build a savings account, try to set goal numbers that you’d like to hit. Adding specifics like dollar amounts and dates you’d like to accomplish things by will make tracking your progress and reaching your goals much easier. Grab a pen and write down your savings goals.
Step two: Work out how much you’ll need to save month by month.
There are a lot of factors to work into this part. It’s all going to depend on the amount of money you need to save to hit your goal, it depends on just how much spare cash you have at the end of each month, and it depends on your timeline for reaching your goal. It’s a delicate balance between how much you can set aside each month and how long you can save for your goal. If you’re trying to save up for a new $600 computer, depending on your abilities, you could either save $100 each month and reach your goal in 6 months, or you could potentially save $200 each month and reach your goal in half the time. It will require you to sit down with your budget and dig in deep to see what kind of savings you can set aside with all of your other monthly financial commitments.
Step three: Make it automatic.
If you’re able to set up a new sub savings account with your credit union or bank, set things up to move into savings automatically. This way, you will never forget to set the savings aside, and you’ll continue to stay on your savings track to reach your goal in time. Better yet, give your sub savings account an inspiring name like, “My First Home” if you’re saving for a down payment on a house, or “Dream Car”, if you’re hoping for that new car. “Emily’s Rainy Day Fund” sounds way better than “Sub Savings 1” on my online banking accounts list. If I have the inspirational push each day or each week when I check in on my savings, I feel way more likely to stay positive and focused towards my goals. If you don’t already have a savings account open, start one online or head into your bank or credit union. They’ll get you set up! Set up your automatic savings to come out of your spending account on payday. The best time to set money aside for savings is the moment you get paid, that way it doesn’t sit in your account tempting you to continue to make purchases, instead of investing in your future.
Step four: Adjust your budget wherever necessary.
When creating new saving goals and new saving habits, you might need to tweak your budget just a little. If there’s room to wiggle a bit, change some of your categories. Chances are you’ll probably have to cut a few things from your entertainment or your “fun” categories within your budget. Maybe you won’t be able to get that bi-weekly latte you’ve built into your budget originally, or maybe you’ll have to cut your internet TV-streaming accounts.
Step five: Small things add up fast.
Whether it’s small purchases here and there that throw you off track of your savings goals, or small amounts of savings you’re able to add to your savings goals, don’t forget how fast the small things add up. Things like using the wrong ATM and incurring fees, or going out to eat on an impulse decision, these small missteps can add up quickly and can really throw you off track of your desired savings goals and even your monthly budget. If you save regularly, even small amounts here and there, you’ll notice how fast things can add up. Getting into the habit and continuing to see growth will only excite you and keep you wanting to work on growing things even further.
Step six: Stay motivated.
Visualize yourself reaching your financial goals and dreams. Keep that picture very close in your mind. Plan out all of the work you’ll need to do to get to your goals, and accept the fact that there will probably be some missteps. There will probably be a few moments where you fall out of your healthy habits and you mess up. That’s totally ok. It just means you’re human! Focusing on your small steps, and the small ways you can get closer to your goals will be really helpful day to day. Get rid of your negative thoughts and focus on thinking positively while you reach your goals. And be sure to not give up!
Creating savings goals leads to you reaching those goals, and that will lead to a more stable financial life for you! If you don’t create the goal and stick to it, you won’t reach it. Share your savings goals below, and bring your friends on board! There is strength in numbers and having a solid support system only gets you closer to your desired goals.
For more articles on personal finance, visit Money Matters