One of the best things you can do for your finances long-term is to start a savings habit. For many of us, though, the idea of setting aside money in a life already cash-strapped seems daunting.
Saving is important, though. It should be a goal for you, especially considering that a rainy day fund can help stave off financial catastrophe. According to a recent Bankrate survey, 28% of Americans have no emergency savings at all. If you are in that group, it’s time to start a savings habit. Here are five tips that can help you on your way:
1. Start with Any Amount
Many people get discouraged because they think they need to set aside a certain amount of money each week, or it’s “not worth it.” The truth is that any amount that you can set aside is better than $0. If you can start with $1 per day ($7 per week), that’s what you do. It doesn’t seem like much, but the idea is to start a savings habit. You can move on from there. But the first step is to get into the mindset that you are going to save something — no matter what.
2. Review and Boost Your Savings
Once you have established that you will set aside money for savings, it’s time to review your amount and add to your savings. After you become comfortable with what you’re setting aside, add more. If you’ve been setting aside $10 per week, boost the amount to $15 per week after a couple of months. Down the road, you can boost your savings even further as you become more comfortable.
3. Look for Things to Cut from Your Budget
Experts estimate that you waste between 10% and 15% of your household income each month. This means that you are probably spending money on things you don’t actually need, or even want. Rather than wasting that money, consider putting it toward building your financial future. Look for wasteful spending to cut from your budget, reduce your spending, and then redirect that money into your savings habit.
4. Create a Rewards System
If you want to stay motivated, you can set up a rewards system for your savings habit. You do need to be careful about this because you don’t want your rewards to cost you money. Instead, think about things you can do that might be out of the ordinary, but that don’t cost. Maybe you can check out a new book or movie from the library after you save for a certain number of weeks. Perhaps you can reward yourself with a lazy weekend afternoon when you boost your weekly savings amount. Figure out what you would enjoy, and use it to reward yourself for your efforts.
5. Make it Automatic
Automatic savings can help you keep up without thinking about it. Arrange regular transfers from your checking account to your savings account. If you have the option, have money withheld from your paycheck each month and deposited into a savings account. It’s also possible to use a tool like Digit.co to use an algorithm to automatically figure out how much you could be saving and doing it for you. Look for ways to make it automatic so you don’t have to think about it, and you might be surprised at how fast your account grows.