The importance of saving money cannot be overemphasized. Because no one can predict what the future holds, building up some savings is one of the most important financial habits one can develop. It can help you get rid of debt and ultimately achieve complete financial freedom. While saving money doesn’t always come easily for everyone, having a savings plan is a good place to start. A good plan can be your road map to a healthier financial life. It doesn’t have to be complicated or difficult. It only requires commitment and discipline. If you want to start your journey towards financial freedom, you’re on the right page. Here are some helpful tips for how you can start a savings plan!
Examine your current financial situation
The reality of your current financial situation may be something you don’t want to confront, but knowing where you stand is key to getting where you want to be. Before creating a plan, it’s imperative to take a look at your current financial state. Take a moment to review your bank statements, bank accounts, bills, savings, and debts. Then examine if your current financial state is one you want to maintain. Think about whether or not your current financial status aligns with your goals and values. What are the things that you may need to change? Which areas need improving?
Take a look at your spending
Now that you know where you stand in terms of your finances, the next step is to examine your spending habits. Review your expenses over the previous months. Take a closer look at whether these expenses are all justifiable, or if any are just luxuries that you could have done without. Have you been spending more on your “wants” than your “needs”? Are your spending habits taking a toll on your financial status? If so, what adjustments do you think you can make, and which items can you give up in order to make room for savings and other important things?
Establish realistic goals
People achieve success when they ensure that their efforts are motivated by realistic goals. The same can be said when it comes to saving money. Determine your “whys” for wanting to improve your current financial status and build your savings. Is it because you’re planning to make a big purchase? Is it because you’re looking forward to a comfortable retirement? Is there a business venture you want to save up for? Regardless of the end goal, the important thing is that you’ve given careful thought to that for which you’re saving up and you have the right motivation for doing it.
Create a plan
You have now determined what your goals are. Great! The next step is to create a plan to guide you and help you achieve your goals. Let’s say for instance that you want to get a car loan that requires $1000 for the down payment, but you don’t have this much money in your bank account. If your goal is to save $1000 over the next six months, it means that you have to save $167 each month. Now, take a moment to determine whether or not this is realistic for you, considering your income as well as monthly expenses.
This is where the importance of planning comes in – determining how to make saving $167 possible each month. Take the time to create a budget and make a list of all your expenses. Figure out if your monthly salary is enough to cover all of these expenses while making sure there’s enough room for savings. Otherwise, you may need to make some adjustments, or look for a “side hustle” to help cover the rest of your expenses.
Track your spending
So the plan is finally now in place. The next challenge is how you’re going to stay on track with your plan and stick to your budget. Temptations will always be there, but the key is commitment and discipline. Be mindful of your spending habits and try to stick to your budget as much as you can. Tracking your daily, weekly, and monthly expenses is an important habit to develop. This way, you’ll know exactly where your money is going and you can examine whether or not there are things that can be tweaked in your plan in order to further boost your savings.
We all want to achieve a life of financial freedom – the kind of life where we don’t stress about money or debt. Start your journey towards financial freedom. Contact Calcite Credit Union for more information.