According to recent studies, roughly 40% of Americas do not have enough money in their savings account to pay for an unexpected event such as a car repair or an emergency room visit. 2020 certainly highlighted the importance of having some kind of emergency savings account and has motivated many to begin saving, even on the tightest of budgets. But what does it take to change old spending habits and what do savvy savers do to resist the temptation to over spend?
Here are some expert tips we’ve collected to help you become a successful saver:
Pay Yourself First
Paying your bills on time is crucial for money management, but if you want to get in the habit of saving, paying yourself is equally important. It’s like buying a monthly subscription for yourself to yourself! You can do this by allocating a certain percentage of your paycheck each pay period to go directly into a savings account or you can automatically transfer money out of your checking account into a savings account every week or month. It doesn’t have to be a lot, but it does have to be automatic for it to be easy. Set it and forget it and, before you know it, you will have a savings account that is growing in value while you are busy doing other things!
Know Your Limits
The concept of budgeting can seem a little overwhelming and feel very restrictive. Instead of thinking about what you can’t spend, try thinking about what you can spend; and instead of calling it a budget, call it a spending plan! Your money mindset is important. Keep items in your spending plan that are important to you and eliminate the things that aren’t. Why are you paying for cable if you don’t really like watching television? Why do you belong to a gym if you prefer walking with a friend? When your spending aligns with your values, you are less likely to splurge as an act of rebellion to your own restrictions.
If you can’t see it, you can’t be it! Be clear about your goals. Is your goal to have an emergency stash of cash or are you hoping to make a big purchase in the next year or so? Maybe you need a new car or want to save for a vacation. Create an account specifically for that goal, name the account something unique and motivating such as “Vacation 2023” and start saving. Consider exploring different banking products like a CD or Money Market account so that your money works harder for you.
Don't Worry, Be Happy
Once you get the hang of saving, you’ll be hooked! As your emergency account starts to build, you may want to boost up your retirement account and start thinking of other financial goals. Financial advisors at Rockland Trust are available to help you build financial security at any stage of your financial journey. To us, being the Bank Where Each Relationship Matters® is about having a healthy relationship with money at any age and any stage of life.
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