Basics of Savings – What Are You Saving For?

• Set a budget before you start saving money so you know where your money is going.
• Have your money automatically drafted out of your main checking account to increase your savings.
• Consider a side hustle as a way to boost your savings.

Naysayers may tell you that saving money is hard but with a little patience, you can achieve your savings goal. The benefits outlast the struggle but taking the initiative and preparation. Many people fail to do it successfully- however, that won’t be the case for you. By following a few of our tips and setting a personal goal, you will see your savings fund grow into a great nest egg. In order to make your success happen, you must set a personal savings goal and then follow through with your plan. This is easy to say, but sometimes it is hard to do in practice. Remember, your savings goal is a promise to yourself-don’t break it.

Treading Water

Americans are “treading” financial water when it comes to saving for the future. Research indicates that 19% of those in the United States have a little saved and only 31% of those surveyed have less than $500 in savings for emergencies. Not surprisingly, the lack of having a savings account causes stress, as 49% of Americans reported that they feel “concerned, anxious or fearful about their current financial well-being”. Assuming that those within the lower income bracket contribute to the high percentage of those without savings is incorrect. Financial hardships account for only 20% (1 in 5 people) of the population that earns an income below the poverty line.

Tracking Expenses

Before you start to save, it is important to take that extra step and develop a budget. Take our Budgeting 101 course if you haven’t. You will create your first budget in 16 minutes! This step allows you to see the full picture of where and how you spend money monthly. Are you keeping up with the Joneses or are you living realistically? The amount left from paying all of your monthly expenses is called an allowance. Take that amount and divide it by the number of days of a particular month and from there you have your daily allowance amount. This could range from $2 to $100 a day depending on your budget. From that amount, can you take any percentage of your allowance and apply it towards your savings goal.

Create an Automatic Savings Plan

Like many, do you try to save each month but fail to remember each time? There are great savings tools to help break the endless cycle of intending to save by having it automatically drafted out of your main checking account. You can set up an online money market account such as Capital One 360. Then you are able to divert money from your paycheck by having a portion of it direct deposited into a savings account even before you receive your check. Additionally, you can apply for credit and debit cards that provide saving opportunities like rounding up to the nearest dollar and placing it into a savings account. An example of this is Bank of America’s “Keep the Change” program or saving a dollar after every purchase such as Wells Fargo’s “Way to Save” plan. Read more about how to avoid living paycheck to paycheck.

Having money deposited in this matter takes out the extra step to remember to save month to month giving you peace of mind. Once you set the schedule, it becomes a habit to add to your monthly budget and you can simply forget about it.

Give a Quick Boost to Your Emergency Fund

Another way to increase your savings goal or emergency fund is to find extra income or try a side hustle. If you are creative, consider opening a shop on Etsy or Amazon Handmade to sell your items. If your gifts are in other areas and you can freelance with sites like Fiverr or Upwork. There are several blogs and podcasts that can guide you through the freelance and retail selling process. If every extra moment of your day is already full, take a look at your budget to see if there are any fixed expenses that you can price shop. Take a few moments to research prices on items like car insurance or internet providers to see if you can receive the same service for a lower cost.

Bottom line – in order to have savings, you just have to start the process. Many people fail to do it successfully, however, that won’t be the case for you. Even saving only $5 every few weeks in the beginning, will add up over time. Your savings goals can be short-term like a vacation or long-term like child’s college fund. Either way, once you have your goal, work to keep it and you’ll reap the benefits.

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