Do you cringe every time you check your savings account balance? If yes, then you are not alone, most people have confessed to being unsatisfactory on how they handle their own savings accounts and funds. May be we should revisit the purpose of savings funds before I tell you how to improve your savings.
Your savings account is your emergency funds account. You do not have to have excess money to open a savings account; you just need to worry about the future. Have you ever thought of what will happen when you get fired today? How long will it take you to find another job and adjust to it? And how will you survive until then? I am not suggesting by any way that savings are intended to bail you out when you in trouble, but it is a good to think at when you really want to save.
So let me tell you how you will improve your savings;
Access your accounts and track where your money is going
The first wake up call to better savings, whether it is your retirement benefits or saving for investment, is self-awareness. This is where I will tell you, if you store money in your bank “Savings” account and withdraw at the end of the month, you are not really saving.
Lack of self-awareness is known to be the biggest barrier to improving your savings.
So what should you do to become self-aware? Good question though it sounds a little rhetorical to me. It is like asking “how should I know when I am not sleeping?” The answer here is simple; bring you to awareness by challenging yourself with a few questions; what am I saving for? For how long will I be saving? Among other similar questions.
When you are sure where all your money goes to, then you are ready for step #2.
Knock out unnecessary spending
This starts with you drawing a budget. Despite how intimidating this may sound, budgets help you keep your expenses on sight and this every will tell you.
Now that your budget is drawn, it is time to cut off any overhead spending. This is the only way to carve out your ability to save on a consistent basis. Most people misunderstand the idea of cutting down your expenditure. I do not mean you start walking to the office instead of fuelling your car or taking a train. Cutting down expenses is a matter of setting priorities I mean why don’t you bring your lunch from home rather than eating out? Why don’t you pay by cash instead of throwing a few bucks every time you pay using your credit card? This can be a little tricky at the beginning but once you’ve got used to it, you will realize you’ve saved a lot. And by “saving” I do not mean the 20% discount you were granted at the cloth store. That’s not saving.
Set your savings goal
Unless saving is your hobby, which obviously it isn’t, you got to have a goal for saving. By goal I mean what do you want to achieve at the end of your savings? Savings are sacrifices and so the best question to ask yourself is, what am I sacrificing for? If you cannot answer this question, I suggest you go to your bank, transfer everything from your “savings” account to your checking account and close it your account.
You cannot get anywhere if you do not have a goal in mind. The fact that you are saving for a new house is motivating enough because you have a bigger vision in mind. Another thing your goal will guide you into is how much you save per day, per week, per month or per year.
You cannot wake up one day and run 10 miles. Similarly, you cannot open a savings account and start saving $1000 each week. C’mon, it won’t take long before you realize you too broke to save! So your goal will help you achieve your ultimate saving amount by starting small. I can start saving $1 per day but with a goal to reach $50 a week.
Jump start your Savings
Is it your pay day? Good, how about you make a blind move and save some cash? It sounds like a terrible idea but trust me, it is an awesome idea. Tax refunds are also a great way to jump start your savings account.
The reason I am suggesting you jump start your savings account is, there is a high probability you will not save anything at the end of the month if throughout the month you haven’t saved anything. You can automate your paycheck so that a certain percentage is saved before you even get to it. This way, you will budget for what is left.
Direct more cash into your savings account from your side hassle. If you have a part time job that gives you a few bucks every day or every week, I suggest you direct a portion of this income into your savings account too.
When you’ve done all the four techniques, it’s time to give yourself regular checks. So my final technique is;
Give yourself Regular checks
Statistics from American Institute of CPA’s indicate that only 17% of young adults check their account on a daily basis and only 4 out of every 10 adults check their account balance.
As much as you are dealing with your money, you must hold yourself accountable. Check your statements and compare with your budget and get to know on what you bills you spent more than you had budgeted. In short, I mean be conscious of your budget and expenses. If you have budget $100 for gas for the month and you’ve spent $150, only two things are possible, Its either you underestimated during budgeting or you thought it wise to do a couple of rounds in the neighborhood to impress somebody.
But whether you underestimated your budget or misused your gas, you can only tell from your bank statements. When you overspend, it jeopardizes your ability to maintain and improve your savings.
With these five techniques, I guarantee you an improvement in your savings. However, the most important point is remaining self-aware that you are saving to achieve something better in the future. Happy saving folks.
The post Techniques to Improve Your Savings in a Few Easy Steps appeared first on Elite Personal Finance.
