This post is the first of many in the finance series, where we will discuss the importance of managing your finances, building a savings, investing, improving your credit score and so much more. We’ve all seen the memes about waiting for Friday because it’s payday or the GIFs with distraught facial expressions because your bank account balance is SO LOW! I’m sure we’ve all be there at one point or another, but the brutal reality is that a lot of us are still there. Now I’m not trying to shame anyone. We are going to start fixing that TODAY!
Do you want a savings account? Of course you do, otherwise you wouldn’t be here. Or maybe you have a savings account but the balance is not as high as you would prefer. There are ways that you can change this. You are the only person who has the power to change this. As much as I wish there were a magical savings account fairy that drops money in your account each month, we both know that is a bold faced lie! You have to be willing to put in the work and the dedication it takes to get your account where you want it to be.
What can I do to build my savings?
This question is usually asked by the person who has a decent stream of income but chooses to spend their excess money rather than saving it. One useful tip is to save a little each week. Choose a dollar amount to put in your savings account each week. Even if you have to start low like $5 a week. That’s $5 more than you had last week. As time goes on, start to increase the amount that you are contributing to your savings account. Another useful tip is to have an automatic payroll deduction. Some people do better with saving money if they never see it in the first place. Setting up a payroll deduction takes that task off your mind. It’s already being done for you all you have to do is remember to adjust your budget to account for this change.
Speaking of budgets, setting a budget for extra activities is a great way to take control of your finances and keep you from over spending. Determine a dollar amount that you will set aside for the things you enjoy doing but are not necessities like shopping, going out to eat or weekend getaways. Once you set a dollar amount, don’t change it. I know that you will find a way to convince yourself that you NEED these new shoes, but you don’t! If it’s something you really want to have or do make a sacrifice and save up until you can afford it without breaking your budget. It’s all about discipline. I never said this would be easy.
How can I save when I have a low income?
Having a low income is no excuse to not have a savings set aside. If this is your situation a strict budget is going to be very important for you. When choosing where you will live or what type of car you will buy, your income is the biggest determining factor and just because the creditor tells you that you can afford it, doesn’t mean it’s in your best interest.
To create a budget, make a list of all your expenses. For bills that fluctuate such as electricity use an average. Once you have your expenses totaled, write down your monthly income. Now take your total income and subtract the total amount of your expenses. Hopefully your income is greater than your expenses and that’s a great start. If this is not the case we need to start making some changes.
Now that you have a budget, you have a great starting point for building your savings account. It’s going to be very important that you stick to your budget if you want to see your savings account grow. Patience is going to play a major role here. Once you put your money into savings, don’t touch it. Pretend that you paid it to the electric company and you can’t get it back. It’s all about mind control! Trust me, I know it’s much easier to just transfer it back into checking but if you find yourself needing some extra funds, try to use any other resources before going to your savings account.
All my income is allocated to other expenses, I don’t have extra money to save.
You may think that you don’t have extra money to save but you will be surprised. Take a look at your other expenses. Are they all necessary expenses? I went to get my nails done with some friends, this is not something I normally do, and when I left I had spent $65. On nails! And I didn’t even get anything fancy. I can only imagine what some of you are paying for your 12”, coffin spiked, glitter nails. No judgement, but is it necessary? Figure out where you can cut costs.
If this just isn’t an option for you then do the opposite and increase your income. You may have a special talent or service that you can offer others which would allow you to work in your free time. The money that you bring in from this side gig should go straight to your savings account. If you are going to be putting in extra work, you want something to show for it and your growing savings account is the perfect thing.
Money Saving Tips for Everyone
- Create a budget and include a frequent treat for yourself. This prevents splurging and that feeling that you deserve to spend an absurd amount of money.
- Pack a lunch to take for work. If lunch is roughly $6/day, that would be $30/week and $120/month. That’s about $1440/year and that’s on the cheap side.
- Meal prep for dinners. It doesn’t have to be salads and carrot sticks this is not a get healthy post. Prepare a larger meal than normal. Store the leftovers in personal sized containers and eat them on nights when you don’t feel like cooking.
- Increase your income. You can do this by asking for a raise, getting a part time job, or creating a side hustle.
- Refinance your loans. If your credit score has improved since you took out your loan, consider refinancing for a lower rate.
Everyone has a different situation, but regardless of the circumstances, there is a way for each and every one of us to save money. You never know when you will need funds to cover an unexpected expense or when an emergency situation may arise that requires extra cash. There are tons of ways to save money, you just have to find the one that works best for you.
Before you go, tell me some tips and tricks you use to reach your savings goals.