Right now saving money is more important than ever. All reports are saying that a recession is imminent. You should not wait to prepare for your future!
The best way to prepare to save and extra or expendable income is to create a plan. I'm sure you already know what I am going to say...you need to Budget! Budgeting will help you to see where you have extra money to invest in accomplishing your goals.
The easiest ways to save money is to follow these 5 tips.
1. Set Long Term Goals
Goal setting is the best way to accomplish your goals. Often times people hear goals and thing that it has to be grand but it doesn't! Your Long Term Goal can be as simple as I want to consistently shop at local business or I want to update my wardrobe in the next year.
You can have goals ranging from paying off your car or saving enough money to adopt a pet. Don't focus on what is important to other people but focus on what is important to you.
The importance is that this Goal is important to you. Specifically, long term goals are normally greater than 9 months.
I'm going to walk through a goal that I had which was Paying off My Car 1 Year early.
2. Set Micro Goals to Get to Long Term Goals
Setting micro goals or short term goals helps you to reach a larger goal. When I set out to pay off my car I knew I needed to identify the best way to get to this goal was to ensure that I had a plan.
I found a calculator on Google that calculated the interest rate saved if you paid off your auto loan earlier. Turns out that I would save about $400 by paying off my car 1 year early.
From there, I decided it would be important to look into refinancing my car. While the 4.5% interest rate I got was amazing for a new graduate I knew there had to be better options out there and there was, My local credit union offered to refinance my 5 year loan at 4.5% interest to a 3 year loan at 1.99% interest. Guess who contacted her bank? Me.
After rerunning the numbers with my new interest rate and including the extra $100-$250 I planned to contribute each month, I would save over $1,000.
My micro goals included:
✔️ Lowering my interest rate
✔️ Contributing an extra $100-$250 dollars a month to my debt
In the end I saved over $1,000. Was it easy? No. I had to constantly remind myself that the goal was to payoff my car so that I could save even more money faster in the long run.
3. Set at Least 2 No Spend Days a Week
When you are trying to save money removing quick spends from your spending habits is beneficial. The $5 here and $10 there starts to add up and eventually can end up costing you in the long run.
Spending $5 a day costs $1,825 a year. 👀
Spending $10 a day costs $3,650 a year. 👀
Soooo...if you implemented 2 no spend days a week in both of these scenarios you could save anywhere from $520 to $1,049 a year.
Trust me, no spend days work!
4. Automate your Check to Deposit Savings into a Savings Only Account
This is your greatest weapon to saving! Money that is out of sight won't get spent. Well that is the goal anyways. Moving your savings account to an account all on it's own will help you in reaching your goals.
Often times I inform my clients to open a High-Yield savings account that is not directly connected to your normal Checking and Savings account and automate those savings. Pay yourself first!
Ensure that you have an Emergency Fund set up! I cannot stress how important an Emergency Fund is to securing your financial future. Don't have an Emergency Fund? Or want to increase your Emergency Fund? Right now, there is an Emergency Fund Challenge going on.
5. Create a Budget and Make Saving a Priority
You knew I was going to say Budget! You just knew it lol. Yes, please create a budget each month to plan out how much you will save. By creating a budget each month you arm yourself with your priorities and set outa savings goal.
If your not sure on where to start your budget, then feel free to grab my 3 Free Budgeting Worksheets!
Don't forget to share these tips with family and friends!