Finance

3 Steps To Smart Saving

3 Steps To Smart Saving 1
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It’s becoming clear that we Americans are not very good at saving money. Granted, there are quite a lot of factors that go into this struggle: Stagnant salaries, student loan debt and the overall rising costs of living all contribute to us saving less than ever. But I think we’re all aware of the importance of saving money. Whether it’s for retirement, buying a home, or building an emergency fund; saving is crucial to being financially successful and secure. The question remains: how to do it? Below you’ll find a step by step guide to help you save consistently each month.

Develop A Strategy

Without a plan, you can’t know how much to save, or how to do it. Consult your financial advisor and analyze your life. Go over your credit with them, evaluate your income and income to debt ratio, and discuss both short and long term goals. If you have a substantial emergency fund that hasn’t been recently depleted, saving for a vacation, holiday presents, or a rainy day, is a good place to start. Your long term saving should be focused on retirement or a child or grandchild’s college fund.

Within this strategy building session, examine where you’re actually spending your money. Look for the way you grocery shop, and how many subscription services you buy into but don’t actually use. This is the time to be very realistic about needs and wants. Purge bad habits and miscellaneous spending and get on track to be a successful saver.

Develop A Budget

If you have debt, which the vast majority of us do, it is critical that you find a budget that works for you so you can stick to it. Once saving is built into your budget, you won’t even need to think about it, it will just be consistently happening. One of the main problems people have is that budgets are not one size fits all. Everyone’s lifestyle is different, everyone has different needs and tendencies. The trick is to find and tailor fit a budget that works within the confines of your lifestyle.

The 50/30/20 rule has become very popular, and there have been different interpretations of it as well. Simply put, it requires 50% of your income to go to essential bills and expenses, 30% to personal spending (wants), and 20% towards financial goals. If that doesn’t seem to make sense for your lifestyle there are other budgets too. The envelope budget, which consists of keeping a certain amount of cash for specific needs throughout the month, is classic. It may need to be updated a little, but the theory behind it works for many people. The zero-based budget is also popular. Every month you need to zero out your income, so every purchase and payment needs to be justified. Speak with your financial planner and come up with a budget that will work for you, so that saving is built in.

Digitize and Digitalize Your Finances

We’re living in a modern world, full of very helpful tools and it would be silly not to utilize them. Firstly, enroll in autopay for all bills that permit it. Sometimes companies even offer a discount if you sign up for it. With autopay you’ll never miss a payment, and it’s automatic so you’re not doing anything extra. Next, download the app for your credit card and debit card. Many offer easy online transfers, multiple payment options, and all the information you need regarding those accounts. They’re secure, but always accessible to you and they make things easy.

Speaking of easy, there are apps that you can invest with now. One or two clicks and you’ve got stocks, or bonds, or mutual funds, or whatever you’re looking for. If you invest more traditionally using a broker or a company, they probably have a similar access tool or app that will allow you to track your money. There are also spend and save tracking apps that can help you monitor all of the moves you’re making with your money. Every credit card payment, all of your stock exchanges, your savings balance, you name it. You can monitor the way you spend much easier nowadays, and that will in turn help you become a better saver.

It’s time to work smarter not harder, and to put these tools to work for you. If organization isn’t your strong suit, find one of these new ways to keep your transactions sorted. Talk frequently to your advisor and lean into a budget that you’re comfortable with. Saving money is imperative to any and all financial stability. Build a strategy and focus on those goals. If you do, financial success will be right around the corner.

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