3 Steps to Boost Your Savings This Year
Many people begin the New Year excited about accomplishing their financial resolutions, but they become discouraged when they feel they are not reaching their goals fast enough. In response, many give up and revert back to negative spending habits that are detrimental to their futures. Saving consistently is challenging, but it’s important to have a financial safety net to protect yourself from disaster and cement a stronger and more independent future. To develop a spending and savings plan that works, there are three steps you can take.
There is not a single method to save: It’s imperative that you understand that there is no one-size-fits-all method to saving money. Maybe you are trying to follow a spending plan devised by your friends and family that doesn’t match your goals and money management style. You should assess your own goals, needs and spending habits to develop a plan that adjusts to your particular situation. If you have heavy debt or high bills, you may find that putting 10 percent of your paycheck into a savings fund stretches your finances too thin. Instead, shoot for a lower goal such as saving between 5 and 8 percent. It’s better to save some money each month, even if it’s a small amount, than trying to save too much and stopping altogether.
Start slashing excess from your life: Saving more money may also require you to cut some of the excess spending from your life. This can be difficult at first because you may not realize how much small expenses are costing you. It can be helpful to sit down and calculate each penny spent on unnecessary purchases for a two-week period. After seeing how much your coffee, lunch with co-workers and nights out are costing you, you may become more motivated to make changes to your monthly budget. For example, your morning coffee and a bagel can cost you hundreds of dollars over the course of a year that could have been saved if you made your coffee at home. Dinging out each Friday and Saturday may look like a small expense, but it can eat into your savings quickly.
Reward yourself for saving money: Saving money should be viewed as a positive, rather than as restrictive or constraining. Instead of thinking about the things you are cutting out of your budget, focus on long-term financial goals such as buying your first house or increasing your retirement fund. To feel better about saving money, reward yourself in some small way when you accomplish savings benchmarks. This will remind you that you can still enjoy yourself while saving money.