Perhaps this has happened to you when walking into your favorite store…the first thing you see is a rack screaming “JUST ARRIVED – 50% OFF TODAY!” and you think to yourself, “Great! I will be able to save some money today.” You walk around the store, make your purchase and end up spending the same amount of money anyway! While you may have gotten more for your money, where is the savings?
May I suggest that you need to redefine ‘saving.’ If your idea of saving equals thrifty spending, then you are really describing a smart shopper. However, if you are ‘saving’ for a car, a house, an emergency or retirement and you end up spending what you think you are ‘saving,’ then you are not truly saving.
In order to save money, a savings plan must be established. According to a recent national survey assessing household saving by the Consumer Federation of American (CFA), “an increasing number of Americans are having difficulty saving to meet goals ranging from meeting emergencies to affording retirement.” Unfortunately, despite having insufficient emergency savings, “fewer than half of survey participants (42%) have a savings plan with specific goals.”
Below are several tips to promote your personal savings behavior and assess your own saving status.
- Set a goal – Visualize what you want to save and why….“I want to save $250 in 6 months in case of an emergency.”
- Make a plan – “In order to save $250 in 6 months I will need to set aside about $10 per week.”
- Identify areas where you can “save” and set those savings aside (in a savings account or other designated place). A savings account is a specific, measurable way to track your savings.
- Record your spending for a week to understand where your money is going. You might be surprised at how much money you are spending on items you want, but don’t need. Trim those small expenses and set the money aside in your designated place.
- Pack your lunch. This one long-term habit alone can save you hundreds over an extended period.
- Are you being over-serviced? Review your cell phone, cable or other similar service bill and you might discover that you are paying for extra minutes you don’t need, extra channels, extra services you could do without.
- Stay disciplined – resist any urge to use your savings for anything except your intended purpose. By keeping in mind what you are saving for – a car, a house, an emergency or retirement – you will be reminded that spending money out of your fund will take away from meeting your goal.
- Save automatically – the easiest way to save money is automatically through payroll deductions that go directly into a savings account. This is a great way to start/grow your emergency fund, a down-payment for a house/car and even retirement.
What steps will you take today to start saving more money towards the financial goals you keep thinking about?