Create a Budget
The best way to make saving money a possibility is to create a monthly budget. Doing so, you will be able to get a handle on your monthly expenses,You would be surprised to find all the places that your hard earned money goes. Take a few minutes and see which of those expenses can be cut or at least reduced. Then compare those expenses to your monthly income and figure out how much you have left over. You then can decide how much of that leftover money you want to spend and how much you want to stash away in savings. This practice is referred to as “paying yourself first”.
Granted, you’ve got bills to pay, but you need to make saving a reality. If you can, set up an automatic payment to go into a savings account when you get paid. This is just like setting up automatic payments to pay your monthly ongoing bills. When your paycheck hits your account, a portion goes to your rent or mortgage, a portion to your phone bill, a portion to your car payments and a portion to your savings, and so on. People who have a passive savings strategy tend to fare better than those who have to transfer money to savings each month.
Educate Yourself about Compound Interest
Compound interest, or interest on interest, means you will earn money on the money you set aside as well as earning money on the interest you earn. This is one of the most motivating factors in saving.
Be Strict with Extra Money
Over time, you are bound to earn more money. You might get a raise or pay off bills. When this happens and there is “extra” money available, put that into savings. You would not need to change your lifestyle at all, but you will be saving more. My father who was a very smart man said to me, “if you get a $20 raise, go out and enjoy $10 of it and save the other $10.
If you would like more savings tips, give us a call!