For most of us, saving money isn’t something that comes easy. Sure we keep meaning to set up an emergency fund, pay off our student loans, and even save for the future. But those intentions seem to get lost in all the responsibilities of today.
One reason why people get overwhelmed with their money and financial goals is that their’s a lot to think about. There’s never one financial goal to consider and work towards. Between building up a savings, paying bills, and hitting big life milestones. It’s a lot. And we’re doing it all ourselves.
If you’re someone who’s struggled to gain the courage and confidence you need with your money. There’s good news. I’m going to share with you 5 tips to help you build that savings muscle.
1. Start small
Choose a goal that’s relatively easy to accomplish. If you know you need to build an emergency fund, don’t focus on the thousand dollars that you need to put in there. Start with opening the savings account.
If you want to pay off your debt, start getting an inventory of everything you owe. On both federal and private loans-down to the interest rate. Better yet, for your federal loans, go to NSLDS.org. Download your student load data. And call up your private loan services and ask for copies of your promissory notes. Have them mail it to you. Once you get them, if you need help reading them, schedule a call with me.
These are much smaller tasks and easier to achieve. They’ll give you the courage and confidence you need so that you can take on more. Too often people fail to save because they get overwhelmed. They create these vague goals and don’t know where to start. Saving for a down payment on a home may seem like an everyday goals that people do. But when you break it down, there’s quite a few more things to do that just saving the money.
Often, we don’t know where to start. And because we don’t know everything, we do nothing. It’s a sort of paralysis by analysis. But when we break it down into our project into smaller steps, we reduce the barrier to get started.
When I take on a new client, one of the first financial goals I set up for them setup is to fund their annual vacation. I’m building a positive association around exercising discipline with their money.
2. Make goals positive and specific.
Saving for something like next year’s vacation is positive. And it’s specific.
Instead of letting them do what they’ve always done. Which is, use their tax refund or resorting to credit card debt, my clients will enjoy a debt-free vacation. That’s going to feel a hell of a lot different than one put on plastic.
Having specific goals gives us something to measure. If we change our effort (save more or less) we change our result. If we fail to save the $40 a week, we could be looking at staying at a hotel in town as opposed to on the beach.
When setting your goals, use the S.M.A.R.T. system.
Specific – What is it that you want to exactly achieve?
Measurable – How much do you need to save per year/month/week
Achievable – Can you do this? Or is it a stretch?
Relative – Why is this goal important to you? If it’s not, stop here.
Timely – When do you need to complete this goal by?
You can download my Dream Worksheet to help you organize your goals.
3. Select a method of saving
It’s important to know how you’re going to put away this money and keep it there.
Bank somewhere that allows you to open multiple savings accounts. Leaving this money in your primary checking account isn’t a good idea. It only increases the chances that you’re going to spend it. It’s helpful to give these accounts specific names to reflect your goal. Name them your Emergency fund, Vacation fund, or House fund.
I recommend a CapitalOne 360 account. There’s a few reasons for this. First, CapitalOne 360 doesn’t have any balance requirements. Also, it’s free. It doesn’t cost anything to open the account. In contrast, most banks charge at least $5 a month if you fall below their limits.
4. Automate your savings
When it comes to saving for a house, building your emergency fund, or any other financial goal. Always automate the good behavior. Take discipline out of the equation.
You are the only thing between you and achieving your financial goals. Given the chance, you’ll talk yourself out of saving.
- Retirement savings
- Dream Goals: Vacation, Travel, Down payment on a home or car. New toy.
- Fixed monthly bills. They’re the same every month. Why wait to send out the payment only to risk forgetting.
- Donations to charity
You can set up automatic payments using your bank’s online bill tools.
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5. Keep an Eye on Things
From here, you just need to keep an eye on your cash flow. Make sure these little changes in your cash flow aren’t leaving you to overdraw your accounts.
Setting Money Goals
Once you’ve started to build your savings muscle, extend this behavior in to larger, long-term goals. You can even work towards multiple goals like saving for vacation and paying off debt at the same time. Use these tips to help you stay on course and build a cash cushion while saving for the future.
Now, I’d love to hear from you. Here’s a two-part question for you today.
1. On a scale of 1-10, 1 being in financial trouble and 10 being a total money machine, where are you at?
2. What are some of things that help you become confident with your money?
Leave a comment below and let me know.
And remember, we are a community. We’re here to help each other out. Your response could really help someone break through some financial challenges.
I want to hear from you
Do you have a pressing question. If so you can drop it in the comments below or ask me privately. If it’s good enough, I’ll answer it and mention you on my next Q&A Tuesday on TommyTV.