Life is full of temptations alongside the things we want but do not necessarily need. This is one of the hardships of saving. It is important to be strict with yourself in order to build a savings account. Setting specific goals will help keep you on track and remember what you are saving for.
Simply depositing your money into your bank account may be temptation enough to spend it as you see the amount you have without knowing how much you should spend on bills as well as savings. Knowing what you are saving for will keep you on track whether you are saving for several goals or one specific goal.
- Pay off your debt first
Avoid using your savings to pay off debt. Late payments and non payments will actually have you spending more of your money, essentially flushing it down the drain before you get a chance to do anything with it. Once you become debt free, stay debt free. You cannot save money if you are constantly paying fees you would not have to pay if you were on top of your bills.
- What are you saving for
You must first determine what you are saving for. Perhaps you want to save in order to buy a home or you are returning to school and need to save your for your tuition fees, you may want to save for a new car or maybe you even want to save for that dream vacation you have always dreamt of. Once you determine the reason you are saving you must then calculate how much money you need to allocate each week in order to reach your goal.
- Don’t wait
Do not wait to start saving, the sooner you save, the sooner you will see a difference and the sooner you will have your bills paid up as well as some money in your saving account. Avoid waiting for a reason to start saving, whether you are waiting for your next raise or you will be finished with one of your payments in the next few months. You should be able to find some money, if even just a little, to allocate to your savings account. If you do not know where to start an idea could be to cut $20.00 out of your entertainment fund per month and deposit it in your savings account as opposed to spending it. $20.00 per month adds up to $240.00 at the end of the year. Sure it doesn’t seem like much but it’s an alternative to waiting and it is also $240.00 you have in the bank. Every little bit will help grow your savings.
- Determine a timeframe
Different goals will demand different timeframes. For a vacation you wish to plan for next year or a tuition fund you need to have before the start of a school year you can determine easily how much you have to save per month in order to reach your deadline. However when saving for a long-term savings goal such as a retirement fund, you must determine the total amount you wish to reach, consider your contributions as well as consider the rate of return that will be added to it in order to succeed in building a sufficient retirement fund.
- Keep track
It is best to keep track of your budget as well as your savings. Seeing what money is going where and how much is being saved will give you piece of mind that you are doing this for a reason.
- Set milestones
If you have decided to save for one large goal it may be wise to reward yourself when you reach certain milestones. Staying motivated is an easy way to stay on track. As long as you set goals that are achievable you should avoid getting discouraged which will lead you to achieving your saving goals.
When you first start your savings account it may seem like it is not adding up but if you stick to it, you will see the amount that you are able to actually save. Seeing the amount grow will give you the determination to continue.