Saving money is the first of several vital steps to achieving financial stability. It can seem hard to do or out of reach, but every little bit counts and will add up to something larger. The five steps listed below will get you started on the path to financial freedom.
Step 1: Setting a goal
This is a great way to begin, and the most fun you’ll have throughout the whole process, other than actually attaining your goal, that is. Imagine what you want that you don’t already have. What would you buy if you could spend any amount of money? Don’t be shy, daydream a little. By setting your goal ahead of time and then working towards that goal, your path to higher savings will be a lot shorter and a heck of a lot more fun. By imagining where you want to be and seeing how close (or far) you are from that goal you’ll be more motivated to keep working and saving no matter what it takes. So pick what you want, even make a list of what you want so they can be easily prioritized, and start from the top!
Step 2: Planning is You Best Friend
Once you’ve chosen your goal it’s time to get down to business. You’re going to have to get the figures straight so you can be honest with yourself about where you are starting, how you are progressing, and just how far you need to go to achieve your goals. Do some research on your goal to get more information. Price different options and settle on some good ones. Plan to pay a little more than the average price of what you find just to give you a little breathing room. Average out the highest and the lowest prices of options you would actually buy (not the car that comes with a rebuilt engine due to flood damage, you don’t want that one.) The key to reaching your goal is to be honest with yourself. Not being realistic, cutting corners or rounding down is going to get you something less than what you have imagined in Step 1. So no matter how big the number seems or how long you think it might take, be honest and go for it. Stick to your plan and you’ll get there!
One way to keep your figures straight is to use calculators like the ones on BankRate.com (http://www.bankrate.com/calculators). There is no lying here, only straight math. The calculators can help you see the stark truths that you will have to admit to reach your goal. It is OK if you are intimidated at first - that is normal. Just make sure you keep your dream in mind it will give you energy when you need it most.
Step 3: Pay Yourself First
Your choice in Step 1 is your primary savings goal, so you have to put it before everything else. It is alright to take what is left over at the end of your pay cycle and put it towards your savings, but only if it is icing on the cake. The first thing you should do each time you get paid is transfer your planned savings amount into a separate account, and then budget with what you have left. And don’t pull from that savings account at all. It’s a good idea to have two savings accounts, one used as a backup for unplanned expenses and one specifically for your great big goal. Most banks have easy ways to avoid monthly fees in your savings accounts, and if they don’t they are not the bank for you. You’re a serious saver now and nothing should get in the way of your achievement.
Step 4: Limit Expenses
This is where the real discipline comes into play and separates the men from the boys and the women from the girls. How many times do you go out to eat? Cut that in half by learning to cook some of your favorite dishes at home. Trust me - if you can save like a pro, you can cook like a pro. Invest in some spices and find a few go-to websites with good recipes for what you like. And brown-bagging it at work may not seem glamorous to your coworkers, but it sure will shave a lot of time off your journey to the ultimate goal. You always need clothes, but figure out just how much you really need to spend each month and do not go over your allotment. I like to bring cash when I go shopping. When my wallet is empty I know it is time to go home. Follow these rules and you will see it is a lot easier to save your money instead of handing it out to others.
A common mistake when limiting your expenses is to hold yourself back too much until you finally crack and end up splurging on things you do not need. Make sure you allow yourself to buy an occasional treat, and make sure you continue to spend time with your family and friends. Enjoying life is the only way to truly appreciate what you do have. Just keep things in check and learn to say no – you will impress your loved ones even more by doing so when it is in pursuit of your goal.
Step 5: Be Creative in Making More Money
When you browse the internet, where is the first place you go for fun? What do you find interesting or know a lot about? Take that knowledge that’s been kicking around upstairs and put it to good use. Start a small side business selling something you like. Write about something you enjoy talking about (right here on examiner.com is the best place; feel free to email me at Erika.Pape@gmaill.com for more info on how to get started.) Maybe do a little spring cleaning, regardless of the time of year. How much could you get for that old keyboard in the basement or the CD’s that have long been replaced with a myriad of more advanced technology? Kill two birds with one stone; clean out the house AND get a little extra for your savings. Be creative in finding a way to use the money you save to make more money and you will reach your goal even quicker.
As you work hard to achieve your financial goals, it is important to believe that anything is possible. Imagine, prioritize, plan to get there, and stay inspired. Be honest with yourself about the true value of your goals and you can find a way to get there. You will be surprised just how much you can only dream about now is attainable in the near future. If you have any questions, would like some personalized guidance or would like to share a story of reaching a goal, email me at Erika.Pape@gmail.com. These tips have worked for me, so let me know what is working for you!