Savings Made Simple
While we all know that we need to have at least six months to a year’s worth of our salary stored in savings should the unforeseeable occur, it can be quite hard to funnel our money into a savings account when the shopping bug strikes. Whether you have to have the newest fashions, or the newest electronic device that will make your neighbors green with envy, our society tends to prefer the gratification of owning a particular product to the stability of a portly savings account. A quick look at the number of American families who carry a hefty credit card balance goes to prove that material things tend to rate higher than having money in the bank.
Only recently has this trend begun to change. With the increasing number of Americans that are unemployed, we’re finally starting to realize that the stability of our jobs may be in jeopardy which is prompting many of us to start saving. Here are some simple tips to help you build you savings balance so you can be prepared no matter what unforeseeable event may occur in your life.
Pay Yourself First
One of the most important aspects to building your savings balance is to make sure that your savings account has priority. This does not mean you need to deposit large sums of money into your savings account at one time. If you have a lot of other bills that currently require your attention, determine how much you can comfortably afford to dedicate to your savings account and stick to it. Even something as simple as $20 a month is better than nothing. The best way to accomplish this is to setup an automatic withdrawal from your checking to your savings account on the day you get paid. This process takes the responsibility off of you to remember to do the transfer and does not give you the chance to make excuses as to why you can’t. Before you know it you will not even miss the money and will be delighted to find that you have amassed a tidy savings balance in a short amount of time.
Avoid Unnecessary Debt
Whether it is in the form of a credit card balance, or a pay advance loan, any form of debt can hinder your progress towards your savings goal. Whether you only want to save an extra $50 or $100 a month, debt has a way of sucking up any available cash you have, preventing you from being able to accomplish your savings goals. This does not mean you should not buy a home or a car. If you find yourself considering making one of these big ticket purchases, take some time and analyze your budget. Would you be able to pay for the purchase and still meet your savings goals? If so, then feel free to make the purchase, but if you need to steal money from your savings account in order to make the payments, you may need to hold off.
Formulate a Budget
If you have found it hard to set aside a set amount of money from your paycheck each week then you may need to do a tough analysis of the things you are spending your money on. You will want to start by writing down all your mandatory bills, like electric, phone, mortgage/rent, groceries, insurance, taxes, transportation and any other bill you need to survive and keep your family safe. You may also want to include a separate column for credit card payments and any other charges that may bring the creditors calling if you do not make a payment. Then write down all the luxury charges you make on a daily, weekly and monthly basis.
Whether it is your daily coffee stop, a magazine/newspaper subscription, or any other charge that is not required for you to survive, write them all down and total it up. You will then want to take a final tally of everything you spend in a month. If you find all your bills and luxuries cost more than your monthly salary then you may need to consider cutting some of the luxuries in order to make ends meet. Even something as simple as your daily $5 latté could be potentially $20 a week you could be funneling into your savings. Regardless of the items you cut, you may soon find you have more excess cash than you thought was possible. You may even find that you don’t even miss the items you cut from the list.
These are just a few of the simple tips that can help you build your savings balance. Avoid excessive debt and make sure to pay yourself first and you are sure to build a tidy savings balance quicker than you ever thought was possible.
This entry was posted on Wednesday, December 30th, 2009 at 12:07 pm and is filed under Saving Money. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
