Alright, we’re two-thirds of the way through January, which means that about two-thirds of people who made resolutions for the new year have given up on improving themselves this year. I hope that you’re not among them; the year has barely started, you can’t already be willing to give up on improving yourself. Still, I know that it can be tough to keep up with resolutions, which is why I’m here once again to share some advice on how to stick with your resolutions and achieve your goals for 2012. This week, we’re looking at one of the most important things you can do to improve your financial situation, namely
Saving More Money
Alright, there are several different ways to approach this particular goal. You can attempt to cut down your spending, a goal that my Frugal Friday posts can help you achieve. On the other side of the coin, you can attempt to boost your salary in a number of ways, from improving how hard much you work at each element of your job to how much you are able to earn by working in alternative jobs and earning more money as a result. Better yet, use a combination of the two, earning at least enough each month to cover your expenses and have some money left over. (Remember last week and creating a budget? Probably good to check it out again and make sure you include some money to put towards your savings)
Once you have a budget that allows you to put some money aside, here are some suggestions to help you save money for the future:
1. Make It Automatic: One of the best ways to ensure that you build up savings for the future is to take advantage of the automatic transfers that most modern banks and credit unions allow you to do. Figure out how much you can set aside each month (a goal to shoot for when you first start to save is five to ten percent of you income; that’s a small enough amount that it shouldn’t affect your money situation too much, but large enough that you’ll make some progress with your saving soon enough), and set up an automatic transfer from your main checking account. Where should you go with the money; well, that’s the next question…
2. Set Up a Separate Savings Account: Let’s be honest, if you try to keep your savings in the same place, as say, the account you use to pay your monthly bills, you savings will end up be spent; it’s natural when you have such an account like that to use it in that way. What you need to do is create an account that you will use purely for saving. You might want to open up said account in an entirely new company on a new website (a good site for such savings accounts is SmartyPig, which focuses on automated savings accounts); that way, the chance that you feel tempted to use your savings for random spending is limited.
3. Have a Goal for Your Savings: It’s important that you know what you are shooting for; whether you are aiming for $5000 or $50,000 in savings will have a lot of impact on everything from the best methods to use to how hard you’ll have to work to meet your goals. (The smaller an amount you need, the easier it should be to find extra money in your monthly expense account and put it into a fresh account.) There’s quite a bit of debate about how much you should try to save, from $1000 to twelve months’ worth of expenses, but it’s probably best to keep putting money aside until you can cover at least three to six months’ worth of your typical expenses. Speaking of which…
4. Resist the Urge to Spend Your Savings: As you build up your savings account, it will become increasingly tempting to spend the money. Don’t. Alright, a bit more advice than that: part of the reason we want to keep our savings in a separate account from our regular checking account is to avoid the temptation to spend the money. If that alone isn’t enough to keep you from you breaking into your savings, you’ll have to find other ways to keep your savings safe. Things like CDs can provide you with a means of increasing how much interest you earn with your savings, while helping to prevent you from withdrawing the money on a whim (or at least, slowing up the process).
5. Keep Updating Your Goals: As you go through life, the amount of money you need to set aside to keep yourself safe and secure will change; the amount that could supply you for months as a recent graduate might barely cover two weeks by the time you are in your mid-fifties, married, and with a future graduate or two of your own. While this is more of a long-term goal than simply a one-year resolution, it is good to double-check your saving needs every few months, or at least every year, to make sure you still have enough set aside to meet your goals.