How do you save money?
This is one of the most commonly asked questions I get. Savings is an important part of the financial plan. Why should you save money?
1. Emergency Fund – pay CASH for emergencies when they happen
2. Pay off Debt – the more money you save, the more you can put towards debt.
3. Savings – you need 3-6 months of savings in case you lose your job or some other emergency happens.
Beyond that, there are a TON of other things you should save money for – vacations, new-to-you car, yearly occurrences (holidays, birthdays, back to school, etc).
So, how do you save? Here are five tips:
1. Make savings a budget PRIORITY!
Create a line item in your budget for SAVINGS and put money in a savings account.
2. OPEN a savings account.
You need a place to put your money!
3. Pay CASH and save the change.
Get a jar or container. Preferably something with a lid. You need something that you can put money IN but not have easy access to take it out.
4. Create a WHY you are saving the money.
Do you have your container from tip #3? LABEL IT with the purpose for that money. Our pickle jar is labeled VACATION FUND because THAT is the purpose for the change in there. Will all that change completely fund our vacation? No. But it might give us some extra money for extra fun stuff!
5. Use your savings ONLY for that purpose.
We all have a bad habit of “dipping in” to the savings. But, all those “dips” end up messing up the hard work you put in to create it in the first place. SO, you need to create your WHY such that you are not tempted to dip in. For example, right now we are saving money to replace my car. We have the CAR FUND savings. It is for THE CAR only. My reason for NOT dipping in to the car fund is that I need to replace my current car sooner than later. I NEED the cash to do that because I WILL NOT go into debt. The CAR FUND is for the CAR.
Were these tips helpful for you? Do you have tips to share? I’d LOVE to feature them on next weeks Money Monday blog post! Email them to me at MelissatheCoach@gmail.com.
Need help changing your habits to SAVE money! Contact me to arrange a FREE initial consult over the phone.