5 Foundational Tips for Creating a Savings

5 Foundational Savings Tips

My last post was about why we should be saving, so for this week’s post I want to talk about tips for actually creating a savings. I’ve got 5 foundational tips for creating a savings; hope they’re helpful!

Savings Tip #1 – Know What You’re Saving For

If we don’t know what we are saving for then what’s the point in saving? There’s not one. Get clear on what you’d like to save for. If you don’t already have an emergency fund, I recommend that be the first thing you save for. You can decide the amount, 3 months worth of your monthly net income, 6 months. I know Suze Orman recommends 8 months. Just start where you feel comfortable and you can always increase as you go.

If you already have an emergency fund, you can save for a down payment on a house or a vacation you’ve been wanting to take. Pick what you are saving for and know the amount. We want to have an end goal in mind, so figure out how much your vacation will cost or what you will need for a down payment.

Having something in mind to save for will also help you think twice when you’re about to make an impulse buy. You can think, do I really want this or do I want that vacation more? Creating a savings goal helps put things in perspective for you.

Choose what you’re saving for and know the amount you need to save in order to achieve it. Write it down.

Savings Tip #2 – Know How Much You Are Able to Save Each Month

Honestly, the best way to do this is to pay yourself first. When I receive income, I pay myself at least 10% and I tithe 10%. That’s that. I never forget to pay myself and I don’t put other priorities over that or my tithing. This ensures I have a savings and will definitely have an emergency fund if something unexpected were to happen.

I understand you may not have been doing this or may not be able to just switch over and do it now, so let’s just start somewhere.

If you don’t have a budget (or a spending plan, as I like to call it) then at least write down your monthly net income (the amount you get on your paycheck) and write down your expenses for the month. It’s easier if you do it in a Google Sheet or an Excel Document so you can total the expenses quickly. If you prefer paper, grab a piece of paper and you can use a calculator to calculate the totals.

I know this can take a bit of time, but let’s get real, do you want the benefits of having a savings (reference last blog post here)? Do you want to get rid of the worry if you’ll have enough to cover an emergency or have enough to pay your bills? I’ll answer it for you, yes, you do.

Alright, so let’s get started. If you use a credit card, then you can check your credit card statement for your expenses, but make sure you include anything else you spent money on for the month. You can have used cash from the ATM or used a different card, so make sure to include everything.

If you use a debit card then make sure you’re balancing your checkbook and writing your expenses in there. I feel like it’s a lost art, but let’s bring it back because how else will you know how much you have in your checking? There’s always pending expenses you don’t want to forget about. You can get your expenses from your check register or your bank account.

Let’s get a feel for where you are with your expenses versus your income.

If you’re living paycheck to paycheck, see how much you could save if you stopped impulse buying or eating out a lot or even canceling a subscription, like Netflix. Make a real effort to see where you can change things up to start saving.

Here’s a few more ideas where you could save a little more:

  • Stick to your grocery list (make a list if you don’t)
  • Take your lunch to work (or make sure you have food at home to eat if you work from home)
  • Use coupons
  • Change the temperature in your house to one degree higher or lower
  • Plan your errands all at once so you only run errands once a week which saves time and money.
  • Pay with cash. Dave Ramsey recommends getting envelopes and putting the cash you’ll spend for that pay-period in those envelopes and once it’s gone, it’s gone. You’ll have a harder time letting go of cash than just swiping your card.

There’s lots of ways to save money, so brainstorm about different ways that would work for you. The money is there, you just need to find it. If your expenses are outweighing your income by a significant amount take time to reevaluate what’s really important. Perhaps you can downsize your living space or trade in your car to get a less expensive car payment. Debt will continue to grow if you aren’t paying close attention to your expenses and income, so pay close attention and make any necessary adjustments.

Decide on the amount you will save every month, whether it’s a percentage of your income or a dollar amount. Write the amount down next to what you are saving for so you can see how long it will take to get there.

Savings Tip #3: Set Up a Separate Savings Account

We want to have a separate account to keep it ‘separate.’ This money is for whatever you are saving for, it’s not for something meaningless that provides instant gratification. We don’t want to touch the money until we need it or have our full amount in there. I’d recommend setting up a separate savings account at a different bank. You can have it at your current bank, but the purpose is to make it more difficult so you’re not pulling the money out for other things.
We want it to be for what we are saving for.

I’d also recommend looking for a savings account with a higher interest rate. This way you can earn a little extra income while your money is sitting in the account. I use Capital One 360 and would recommend them, but you can choose whatever bank you prefer. Capital One 360 also has a feature call ‘Savings Goals’ which shows your progress with your goal. Just a little bonus, if you would like to sign up with Capital One 360, you can use my referral link, here, and receive a free $25. Only if you’d like of course, choose whatever works best for you.

Savings Tip #4: Auto-transfer Amount into Your Savings Account

This is a great way to make sure you are saving the same amount every month. You can set up an auto transfer with your current bank to have that amount go to your savings account.

There’s a lot going on in our lives so if we can simplify our lives at all, I’m all for it. Setting up an auto transfer means we don’t have to take the time to manually do it, nor have to remember to do it. 🙂

Plus, if it you aren’t consciously having to remember to transfer the amount, you aren’t tempted to not transfer the amount and spend it on something less important.

Savings Tip #5 – Watch Your Savings Grow

Check your progress along the way to help you stick to your plan. You can see your money growing and it’s exciting. Plus, in case an auto-transfer doesn’t go through, you’ll notice it right away. Watching your savings grow can help you want to save even more money to reach your savings goal even faster.

Just as a side note, if you think seeing the money in your account will tempt you to take it out earlier then don’t watch it grow. Just check at the end of the time frame. We are all unique, so be aware of what tempts you and what motivates you and act accordingly. 🙂

I’d love to hear any other savings tips you have; share in the comments below!

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