One of the best pieces of financial advice I ever received was to pay yourself first. Before you pay a single bill, before you have any fun with your hard-earned cash, tuck away a little bit of it for a rainy day.
When you are able to make saving money automatic, you create great financial freedom for yourself. When those bills you forgot to budget for crop up, you’ll have savings to draw on. When times are tough, your emergency fund will be there. When you find a great sale on something you’ve coveted for a long time, you’ll be able to buy it.
But for those of you who aren’t very good at saving money, it can be difficult to get into the savings habit. It takes a little bit of planning and a whole lot of discipline.
How to Make Saving Money Automatic
Start with a goal in mind.
What are you saving for? How much money will you need to reach your goal? Be specific. You want to write down exactly how much you’ll save. You’ll want to make sure you set a deadline for this goal. Be realistic. If you’ve always struggled with saving, start small. It’s important for you to set attainable goals so that you can reach them and then build on your successes.
Set it and forget it.
The easiest way to save money is to automate it. Talk to your HR department about how your paycheck is automatically deposited, and make arrangements to have a portion of every paycheck put into a savings account before you ever see it. Start with the largest amount you can afford, and as you receive pay raises, increase your contributions to your savings account. If you wait to put money into savings at the end of the month, you will never have any money saved to put there.
Put money into a flexible spending account to save money on your taxes and be prepared for health or childcare-related expenses.
Make sure that you are automatically contributing to a retirement fund. If your employer offers matching funds, be sure to take advantage of that opportunity to grow your savings that much faster.
It will take less than an hour to set up these automatic savings programs, and once they’re set, you can focus on how to spend the rest of your money knowing you’ll have savings to fall back on.
Keep the change.
Another way to make saving money automatic is to get in the habit of throwing all your spare change in a jar. Whenever you find money (in your couch cushions, in your car or on the street), pick it up and add it to your jar. You’ll find that all those little bits of money add up to help you reach your savings goals.
Get in the habit of saving money on everything.
The best way to make saving money automatic is to keep saving, even when times are tough. You’ve got to constantly exercise those saving muscles to train yourself to do it reflexively. So clip those coupons, shop around for the best prices, make your meals at home, find a better mortgage rate, sell your old stuff, and automate your finances to avoid paying late fees on bills. Research new ways to save and implement money-saving ideas that have worked for others for decades. Learn to say “no” to impulse buys that threaten your goals. Every little bit you can save helps. And the more you save, the easier it becomes.
Make time to save money.
Make saving a priority in your life. Start by establishing a time each week to review your expenditures and set a budget. Carve out an hour each week to do something that will save you money – like negotiating a lower bill or making meals in advance for the freezer.
Learning to save money can be challenging – especially when money is tight. But when you make saving money automatic, you unlock the doors to financial freedom. It’s all about establishing the habit of saving.
Even if you don’t win the contest, you’re winning if you’ve got a plan to save money.