Do you save regularly? If not, you should reconsider. Developing a saving habit is one of the best things you can do for your financial health. There’s no better time than now to start saving, so you can begin earning interest on your money. Building up a fund for emergency expenses will also reduce the chances of needing to borrow money or use a credit card which often leads to owing interest.
In the short term, savings can provide you a cushion to deal with emergencies, such as a job loss, unexpected home repairs, medical bills, etc. It will also help you reduce or eliminate your need to take out loans or other financing. Most importantly, building up savings while you work can mean the difference between a comfortable retirement and scraping by on Social Security benefits.
If you’re not a regular saver, where do you begin? Here are three tips to help you get started:
Set small, manageable goals. Remember the old adage that “what gets measured gets managed.” Set specific goals, whether it’s to save so many dollars per month or a set percentage of your earnings. Then track your progress toward your goal at frequent intervals. This will help you gradually expand your goals as you see your successes.
Save automatically wherever possible. Sign up for payroll deductions into your company 401(k) plan, or arrange for a portion of every paycheck to go straight into a savings account at your bank. Saving is much easier if you never get your hands on the money.
Track what you spend. Keep records for a month or two so you know where your money is going. Then figure out where you can cut back to generate some savings. For example, give up one espresso coffee per day, or make your own lunch two days each week instead of eating out. Or think up one creative, low-cost way to have fun with family or friends each week. Put aside the money you save so you can see the results.