Fewer Americans can save enough money to live on, and many couldn’t even pay an unexpected expense if it were to come up.
But saving is the foundation of a strong future.
If you don’t have as much set aside for the future as you would like, there are some steps you can take to remedy that situation.
Have an End Goal in Place
It is important to know what you are saving for in the first place. This can help motivate you.
Perhaps you want to be financially independent, so you do not have to work to support the lifestyle you are looking for.
Even if you feel your dream will not become a reality, have fun thinking about what you would do if you had the money.
You might want to have some short-term goals, like buying a car or helping your kids pay for college.
There are a few ways to help yourself hit these goals. If you want to help your kids pay for college, you could set up a savings plan.
Know you may not be able to cover the full cost of their education, so you may want to look to other options along the way.
Cosigning on a student loan can help them get approved. You can look at a guide with more information on your rights as a cosigner.
Factor Inflation into Your Planning
Inflation can erode the value of your savings, so if you are not actively investing, your money is losing value.
Your money needs to grow faster than inflation is happening to build wealth.
Your financial needs also evolve over time, which means you will need to plan carefully and reevaluate those needs.
Gradually increasing the percentage of income saved can help combat inflation too.
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Reduce Your Expenses Where You Can
Reducing expenses will give you funds to pay for your goals.
Look over credit card and bank account statements to see how you are currently spending your money.
If you don’t know how to do this, you may consider connecting your credit card and banking information to an app or site that will help you do this.
List out the unnecessary expenses, such as subscriptions, gym memberships, or cable channels.
You can use free alternatives to these things by utilizing your local library, exercising at home, and watching more free content online.
Consider bringing your own food and beverages from home instead of buying them out when you go to work.
For all necessary bills, such as internet and phone bills, see if you can negotiate with your current provider to bring them down.
If you can’t it may be time to shop around for a different provider.
Budget Your Money
Many people don’t want to budget because they feel it could deprive them of enjoying their money. But the opposite is true.
A budget can give you more financial freedom by helping you save for the things you truly want to spend your money on.
Creating a budget can help you take control of your finances again, making sure you spend your money in a way that better reflects your values.
With a budget, you can allot funds to both long and short-term needs before you buy things you want.
Budgeting does mean you may need to reconsider some of your wants and determine which ones to prioritize first.
But it can also remove the stress of not having enough money for your bills since you will have already taken care of those.
When you budget, you can save for future goals, like buying a car or going on a vacation, but it’s important to pay yourself before you do anything else with each paycheck.
This ensures you put the money in your savings accounts instead of letting it go to various out of budget purchases.
If you have a retirement plan with your employer, it is very easy to pay yourself first because the money may be deducted from your paycheck before it ever hits your checking account.
Look over your retirement contributions to make sure you are at least taking advantage of the full match offered by your employer.
You can usually split your direct deposit between accounts, so consider having a portion of your paycheck go to your savings account so you never miss the money from your spending accounts.
Keep an Eye on Your Credit Score
Many important milestones in life, including buying a home or car, require more money than you have available, so you may find you need to take out a loan.
Having a strong credit score can make it much easier to get a favorable rate.
It’s wise to keep an eye on your credit score even if you don’t plan on taking out a loan to make sure there are no errors.
Keep to Your Plan
Even if your income goes up, you should still stick to your monthly spending targets.
This helps you live below your means and avoid going into debt. You can use apps or worksheets to track expenses, and there are tools that will help you monitor spending and send alerts if you go too high.
Depending on the tool, you may even get an alert if you are overspending in a certain category.
While counting every penny ensures you stick to your goals, if you don’t like this approach, you can allow yourself to spend a certain amount each month by putting the funds in a dedicated checking account.
When the funds are gone, there will be no more until the next month.
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Increase Savings Over Time
Your peak earning years are in mid-life, so it makes sense to increase savings as your income increases.
If you feel you are not saving enough right now, start with saving as much as you can and then gradually increase it.
Some companies automatically enroll employees into a retirement plan, saving larger percentages of their paycheck each year. This can help you build wealth over the years.
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Last Updated on 3rd April 2023 by Emma