The Secret (and Easy) Way to Build Your Savings
October 8, 2020
Want to know the secret to increasing your savings? It’s easy: pay yourself first.
This means before you spend your paycheck on monthly bills or other expenses, put a set amount of the money into a designated savings account. For many consumers, this practice works better than trying to save whatever money that remains at the end of the month.
How to pay yourself first
1. Make it a habit
Making a commitment to saving a certain amount each month is a great place to start. The habit part comes into play when you set up automatic transfers from your checking account to a savings account each payday. In a few months, you won’t even miss it and your savings will grow. This single act will help you achieve a healthier financial future.
2. Make it a priority
Another tip is to include savings as part of your budget. Focus on your savings before spending money on anything extra.
3. Make use of any extra funds
You can add to your account by finding extra funds in your budget, too. Add all or part of the money into your savings account when you reduce or eliminate an expense. Also, it’s a good idea to add extra income, such as tax refunds, raises, or bonuses to your savings – at least a portion of it.
While most experts suggest having three to six months of living expenses set aside, starting with a more manageable goal may help you stay on track. This sounds like a lot, but it will get easier as you make regular contributions a habit.
Building or rebuilding your savings takes commitment, but using simple tools, like automatic transfers and making it a priority by including it in your budget, is a start. Once you begin, you will be on your way to achieving your financial goals.
Tags: Savings, Money Management, Tips and Tricks