How to Kick Start Your Savings Plan
You know you need to save money. You have tried before but failed. You turn on the news or read a newspaper or blog, and money experts are telling you to save money, but if you’re like most people, you spend your time playing catch up and trying to stay out of debt and not saving.
Saving money may seem impossible but as it often is with goals, if you can get a head start and some momentum it’s much easier to follow through. The following tips will help you kick-start your savings plan and get the momentum you need to achieve your financial goals.
Before you get started, establish a savings goal and a purpose for your savings. You may have several savings goals, for example, saving for your emergency fund, your retirement or even a tropical vacation. If necessary, focus on one goal at a time. Get that savings account growing and on track before you shift your focus to another goal.
I would advise you to start with an emergency fund first if you don’t have one and then move on to other goals. You will want to have 3 to 6 months of expenses in your emergency fund before you start planning that trip to Hawaii!
Ok so let’s get started.
1. Know Where Your Money Goes
You probably know how much you earn and the amount of some of your expenses. However, you may not be aware of all of the smaller costs that slowly deplete your bank account. Go ahead and track your spending for a month. List every single expense, including those coffee drinks you purchase from time to time. Include every single expense no matter how small. At the end of the month, total the spending and put them in categories (food, bills, entertainment, etc. really ). This step can be a real eye opener for most people and is also the hardest because we start to realize where the money is going.
You can use a simple notepad or even the notes app on your phone for this. Whatever is the easiest. There are a bunch of budgeting apps as well that can help with this such as EveryDollar which is recommended by Dave Ramsey. The point here is to actually get a full understanding of your spending habits.
2. Create a Budget
Use the expense tracking information you gathered in step 1 to create a budget. Creating a budget may sound tedious; however, it will help you control your money instead of your money controlling you. A budget is the first step to being able to truly achieve a solid savings plan. You have the information to know where you can cut back your spending and thus save more money now.
Add a savings category to your budget and automate your savings. Once you see how much you were spending in each category, you can try and start cutting expenses and putting that money into the savings category. For example, if you noticed that you were spending $60 a month on coffee you can try and cut that down to say $40 and put that extra $20 into savings. Do this for a few categories, and you could save an extra $100 a month.
Spending too much on clothes, beauty products, food? Try using coupons to cut your expenses and use the money you save toward your savings goal. Couponing is probably the easiest way to save money period. If you are new to using coupons be sure to sign up for my FREE, Learn How to Coupon E-Course below, and I will send you a free PDF guide to get you on your way!
Hate the idea of clipping coupons? Try these awesome coupon apps instead.
3. Take Advantage of Any Financial Windfalls
Any financial windfalls you receive (bonuses, inheritance, tax refunds) need to go straight into your savings account. This is where you’ll start to gather that momentum discussed earlier. If you receive a tax return, put it in savings. If you earn a bit of overtime, put it in savings. If you win $40 with a lottery ticket, put it in savings. If you find a twenty-dollar bill in your jeans when you’re doing the laundry, put it into savings.
Finally, keep tabs on your savings and watch it grow. This step is motivating because it gives you a sense of accomplishment. Whether you’re only able to save ten dollars a week or a thousand dollars a week, the point is to start saving.
4. Make it Fun
Get others involved! Make it fun do a challenge with the family and see who can save the most. This will give you the motivation to save.
Are you reaching your savings goals? How are you doing it?This post may contain affiliate links. Read my disclosure policy here