We all know we should put money away. But something that seems easy to say can be hard to do in real life.
Putting money away is the first step toward a secure financial future. But many people are putting it off for another day. These days turn into years of lost money very quickly. Without savings, it will be very hard to reach long-term financial goals and become financially stable.
To save money, you have to be in charge of your money. How much you make has nothing to do with how much you save. It all comes down to how you handle your money. If you live from paycheck to paycheck and have a lot of credit card debt, you don't have control over your money. You're also not saving for the future.
You need to save more and spend less. There is a link between the two. If you want to save money, you have to spend less.
And none of it is really that hard once you start doing it.
First, sit down and write down what you want to do with your money. Just think about what you want your money to do for you. You might want to save up for a down payment on your first home. You might need to buy a new car. Set long-term goals like retirement and short-term goals like getting new furniture for the living room.
Give each goal a time frame and a dollar amount. In order to save, you have to know what you are saving for. You need a good reason to save your money.
You will need to set up a separate account for saving. You probably already know that if you leave the money in your checking account, you will spend it. Have a savings account that is easy to put money into or move money out of. Many banks will let you set up a monthly automatic transfer to your savings. This makes it easy to set and forget. Like any other bill, it has to be paid.
Your money will start to grow over time. This is fun and interesting. Most people are then more likely to save more. Saving money and putting it to good use can become like a drug.
If you want to save money, you will find that a written budget is almost a must. If you want to change the way you spend, you need to know where your money is going. A budget not only shows you where your money is going, but it can also help you plan how you are going to spend it. Include a plan to pay down your debt in your budget, and it will help you get the most out of your money. Budgeting is easy, and you don't have to give up everything to do it. It's just a plan for how to get to where you want to go.
If you have a lot of credit card debt, you should put most of the money you save toward paying it off. You should save a small amount for emergencies, but most of the money you are saving should be going toward paying off your debt. The reason is easy to understand. Why pay 20 percent interest on a credit card debt when you can get 2 to 10 percent interest on your savings? You spend more than you need to. First, pay off that credit card debt. In the long run, it will save you more money.
When people get money they didn't expect, they often put it in their savings accounts. Your bonuses, raises, tax refunds, and extra hours can help you save a lot more money. You don't have to spend less or save more, but your account balance is going up.
Saving money is not really a secret. You just need to begin doing it. Taking the first step is often the hardest part. But once your money starts to change and the interest starts to work for you, you'll be hooked on saving for the future.
