Many of us struggle to save enough money each month. Whether it be for the short term or long term, saving money each month will put you in a better financial position. However, it is easier said than done. When that text comes across your phone from your friends inviting you out to a bar, or an amazing concert is coming to town, how likely are you to just abandon your savings goal for a little fun? This of course doesn’t mean that you can never have fun with your money, but to really start saving successfully, you need to have a plan and stick to it. This all starts with budgeting.
Budgeting Your Money
Getting into the habit of writing out our budget each month can help you put into perspective how much money you have left over to play with once you have saved and paid all of your bills. Without a budget, it is too easy to overspend. So, if you want to save, this is the first step.
Start with determining all your different channels of income and how much you will be making from each. From there, outline all of your necessary expenses for the month, such as gas, groceries, and any bills. With the amount that is left, determine what would be reasonable for you to save. Make sure to save a little to have fun and go out with friends, because if you make your goal to restricted, you will most likely abandon it. Start small, and gradually increase your goal as you become more dedicated to your plan.
Other than finding ways to increase your monthly income to save more, the more reasonable approach for most of us would be to consider skipping that daily Starbucks trip or finding other ways to cut corners an extra spending. Once you have your budget for the month, you should consider using these following tools and strategies to help increase the amount of money you are putting away.
Planned Automatic Transfers, Separate Accounts, and CDs
One option you can look into is if your bank has a save as you go or keep the change program. These usually functions by transferring any extra money left over after a purchase into an account. So, say you purchase something that $5.65, the remaining .35 that would make it a total of $6.00 will be moved into the account from your checking. This can be an easy way to gradually save a little extra each month, which you can then dump into your savings each month.
Another option is simply to set up a predetermined date where a certain amount of cash is automatically transferred from your checking account to your savings account. This will help you streamline the saving process and let you focus on other things rather than having to stress about making manual transfers each month.
To help avoid temptation for overspending or pulling from your savings account, you can consider opening another account at a different bank. That way it is more of a hassle to access your money on the fly. It is too tempting to just open an app on your phone and swipe money into your account, so plan to deter this ahead of time.
Finally, you can also look into opening a CD. The returns are typically better than a normal savings account anyway. The catch with opening a CD though is that there is a term limit, or in other words, a determined amount of time that the bank will hold your money before you may access it again. If you want to pull the money out earlier, there will usually be some kind of penalty. This can be another deterrent of overspending, and keep you firmly on the path saving.