KEY TAKEAWAYS:
✔ Learning to save can easily become a habit if you are motivated, committed and believe in yourself.
✔ Paying yourself first is an effective way to kick-start your saving habit and can help you reach your savings goal sooner.
✔ Automate your savings and use opportunities like a raise, overtime pay or paying off a loan to ramp up your savings.
Saving money is a skill that anyone can learn and master quickly. Like anything new, it may seem difficult at first but over time it will become second nature. Like riding a bike, hanging a picture, or using an app on your phone, they all require some learning, practice and effort.
How quickly you learn the art of saving will depend on your commitment and motivation. So, if you’re ready to give it a try, here are five steps to get you started.
1. Pay yourself first
Traditional ways of saving start by paying bills and expenses first and then putting whatever is left over into savings. For some people, this may mean not having anything left over to save. Instead, start by paying yourself first. This means that with every paycheque you carve out a certain amount first and put that towards savings. If money is tight, start with a small amount like $25 or $50, then use the rest of your paycheque to cover bills and expenses. You may be surprised by how quickly you adjust to living on just a little less while you develop the new skill of saving money. The key is to know how much money is coming in (your paycheque) and how much is going out (expenses and bills) by creating a budget.
2. Set a specific goal
It will be easier to stay motivated if you can picture success in your mind. For example, if you’re saving for a new piece of tech, a trip, or furniture, you can imagine how rewarding it will feel to finally bring it home. Likewise, if you set a goal to save five hundred or one thousand dollars, you can visualize the day when you get to spend it on anything you want or just let it grow. One way to ensure success is to write it down. Studies have shown that when you write down your goals you are 42% more likely to achieve them than if you don’t.
3. Ramp up when you can
Once you’re in the habit of paying yourself first, consider giving yourself a raise. If you’ve recently gotten a raise at work, overtime pay, extra commission or have paid off a loan and freed up some money, you can use that extra income to increase your savings. Ramping up your savings will help you reach whatever goal you’ve set for yourself faster. The momentum of saving starts to become a habit and gets easier. As you become a solid saver, you’ll love the feeling of achieving your savings goals and being able to pay for things with cash instead of having to take on debt.
4. Automate your savings
It’s helpful to keep your savings separate from your regular spending accounts. You can do this easily by opening a no-fee savings account at a financial institution other than the one you use for day-to-day banking. By going elsewhere, you’ll be less inclined to tap into that account. Each time you pay yourself first, have the money automatically transferred into this account. If you want to avoid the temptation of using your savings at the mall, don’t ask for a debit card when you open the account. This means you’ll have to transfer the money to your spending account before you can spend it. The extra step may be enough to make you pause and reflect on your success as a saver.
TIP:
Open a no-cost savings account and give it a nickname. Call it “New computer” or “Camping trip” or anything that will remind you of why you’re saving money. It will keep you motivated to keep saving and discourage you from dipping into the account.
5. Grow your money, grow your confidence
Once your savings start to grow out of sight, but never out of mind, keep setting new goals and looking for ways to do more. Create a plan that looks at what you are earning versus what your expenses are. Knowing these two things can help you look for ways to reduce expenses, such as paying down loans or increase savings. The best part of planning is that you start to gain control of your money and build a positive habit that helps you achieve a goal. You will start to see your dedication paying off and begin to enjoy the sense of security and opportunity that comes with money in the bank.
Starting to save money is just one of the many things you can do on the path to a better financial future. Learn more about other smart money habits you can build fast.
Disclaimer: This content is intended for informational purposes only and does not constitute financial advice on any subject matter.
