If you’ve had trouble saving in the past, it’s probably because you simply don’t have the right habits in place. Here are five to practice that will make this much easier.
Pick Definite Goal and Then Focus on It
Instead of just picking the vague goal of wanting to save more, pick a finite target. How much do you need to make sure you would be fine for six months if you lost your job, for example? Is there a trip you’d like to take or a particular type of debt you want to pay down?
Once you do this, make sure you stay focused on it regularly. Don’t let the goal fade into the background as life gets busy. It should be something you’re thinking about daily – in a positive way – and rewarding yourself for getting closer to.
Save, Then Spend
The vast majority of people have one habit that is completely ruining their finances. This is the tendency to take each paycheck and use it to cover their necessities, buy some other things they want (e.g. dining out, entertainment, new clothes, etc.) and then put what’s left into savings.
This is no way to create a healthy nest egg. Instead, you should address your savings goal right after your necessities are taken care off. Once your savings are looked after, you can move on to buying items that aren’t as important.
Set Limits on Nonessentials
Budgets are obviously important for keeping your finances in check and not overspending. Yet a lot of people create rigid budgets that are simply too hard on themselves and don’t allow for any fun. This is no way to go about saving your money and will almost always fail.
Instead, accept that you’ll want an overpriced cup of coffee from time to time or a new pair of shoes you don’t absolutely need. Just set a limit on how much you’ll allow yourself to spend on these things. Then you can enjoy them guilt-free, knowing that you’re still on track to hit your savings goal.
Look for New Places to Put Your Money
Another habit successful savers practice is putting their money out of arm’s reach so they can’t possibly fold to the temptation of buying something they don’t need right now. A savings account will make it a bit tougher to shop impulsively, but it’s usually not enough.
401(k)s are awesome for this. Mutual funds and other investment vehicles are also fantastic, provided they’re not too risky. Best of all, you won’t just be saving, but making money on this discipline as well.
Track Your Spending at the End of Each Month
Finally, at the end of each month, take a half hour or so to look at how you spend your money. This is very easy to do with online banking and credit cards so it really shouldn’t take too long.
All you want to do is see if there were any upticks in spending you can’t justify or opportunities to save more money. After a few months of practicing this habit, the entire process won’t take long at all and you probably won’t even find any surprises.
Saving money doesn’t have to be difficult. You just need to cultivate the right habits. These five have been proven to work in the past, so why not adopt them today?