Everyone likes to spend, but when it comes to saving, not everyone is good at it. Americans are among the world’s worst savers.
From low income to mortgages to student loans to credit card debt, factors like these never let us save enough for emergencies or even for a retirement fund.
But there’s a large number of people who cannot save because of overspending. Maybe they like fine dining a little too much, or cannot live without designer perfumes, or feel conscious about driving anything less than a brand new car (everyone wants to be like the Johnsons!). At the end of the day, they realize there’s not a penny in their savings account. Alan Harper from Two in a Half Men knows all about that!
Some people are smart at saving. It isn’t like they are blessed with superpowers (you will not see them in Deadpool 3!) – they are just careful and efficient with money. If you want to be good at saving money, try following these tips that effective savers live by.
Taking out money manually from an account and putting it to savings can often be difficult, because you think there were better things you could do with that money. That is why smart people automate this process.
All you have to do is automate the transfer of a part of your income to a savings account. If you get cash back on your credit card/s, make sure to automatically transfer them into the savings account as well.
By automating your savings, you not only get to grow your savings at a consistent pace, but also never have to feel bad about manually moving money from one account to another.
Pick the right strategy
The right savings strategy isn’t one size fits all. Just like income and expenditure varies from one person to another, the proper way to save is also different. What works for your neighbor may not work for you.
That is why, instead of blindly following someone else’s savings strategy, try to devise a strategy that’s fit for your lifestyle and income.
This involves taking your income and expenditure into consideration and then coming up with a strategy that you will be able to stick to. You may also utilize the help of online tools to come up with the right savings strategy.
Effective savers don’t just create strategies; they create goals. When you have a goal for saving money, it brings excitement and joy into the process. Kind of like experiencing tax cuts which all workers know is awesome!
For instance, you may want to save money for buying a new house or your child’s college fund. If you have no goal to work towards, you will quickly lose interest in saving, rendering the whole process ineffective. You don’t want to be a failure like Chicago, Baltimore, Oakland, Greece, and so on. Money does not grow on trees and wasting money on irrational ideas does not make any sense.
Creating goals isn’t enough; you must also prioritize your goals. For instance, is taking an international vacation more important that buying a house? Does saving for a retirement fund come first or does saving for your son’s college education? Prioritizing goals will help you reach your financial objectives.
Don’t be like Peter La Fleur in the first half of Dodgeball – organize yourself and focus!
Make the most of your savings
Don’t just let the money sit in the savings account. Invest it wisely to get greater returns. If you don’t know much about investments, take the safer route and invest in notes and bonds backed by the government.
You can also leave some of your money in your savings account and invest some in a trusted, reputed program for some decent monthly or yearly returns.
Slowly reduce expenses
It isn’t necessary to change all habits or reduce all expenses at once. Instead of eating out five times a week, reduce it to two times a week, eventually bringing it down to once a week. By taking it slow, it is possible to cut down on unnecessary expenses and save more.
Stick to a routine
Consistency is key when trying to get better at saving. Making lists of wants and needs, necessary and unnecessary expenses, and slowly cutting down on them is the way to start.
But it will only be effective when you stick to it. Sticking to the routine for six months, and spending freely for the rest of the year isn’t going to get you anywhere. For best results, make a routine that you can follow and stick to it. Don’t be like Norm from Cheers who had no focus in life.
Saving money doesn’t have to be a burden. By following these habits of successful savers, you too can reduce expenses and have your savings account jingling.