It is nearing that time of year when we sit down to plan out next year’s resolutions. Two of the most popular New Year’s Resolutions are to lose weight and to save money. Why wait? You can start a savings plan today in just a few easy steps.
- Identify your savings goals. Have you ever heard that expression, “If you aim at nothing you’ll hit it every time?” I know it is a bit cliche, but when it comes to savings plans, it’s true. Those who find the most success saving money do so because they are committed to a plan–they have a goal in mind. It could be a down payment on a home, an emergency fund, a new (used) car, a sunny day fund, or even as far out as retirement. Most plans are a combination of both short and long-term plans.
- Consider an online savings account. I have never been a saver. I like to save money, and I whole-heartedly agree with the importance of saving money, but every time I begin to amass some savings something happens that wipes me out. That was until I discovered ING Direct. I opened an Orange Savings account with them and began moving just $25 a paycheck (every two weeks) into an account. I’ve since opened four more “sub-accounts” there with specific savings goals and put a little in each account out of my paychecks. The money is still accessible, but it is far enough away that it is “out of sight, out of mind.” Check out my reviews of the other best online banks.
- Sign up for direct deposit. I mentioned that I automated the transfer of money from my checking account to my online savings account. To take that a step further; visit your payroll office and ask if you can split your deposit into two separate accounts. Most employers allow you to identify a percentage of your check to go into a primary checking account, and the remaining percentage to go into a second checking or savings account.
- Start small, and slowly increase the amount you save. Whether you decide to use direct deposit, automated transfers, or manually write out a check each month, start with a small amount to get used to the idea. Elect to have 1% of your pay diverted to savings, or move $25 a paycheck to your online savings account. Trust me, you are not likely to miss these small amounts, and if you are like me, you probably used to spend this on eating out each paycheck cycle. Now I just brown bag lunch and pocket the savings.
Advanced Savings Strategies
Once you are comfortable with your established system of saving money you can graduate to more advanced concepts.
- Pocket your store savings. It goes without saying that to be in position to save money, you must first reduce your expenditures. One way to flip the switch is to pass on something you would normally buy in the store and pocket those savings immediately. For instance, the other day I was looking at video games and saw a new one that looked like fun. It was $49.99. The old me would have tossed the game in the shopping cart and moved on without much thought. The new me put the game back on the shelf, made a mental note of how much it cost, and went home and scheduled a $50 transfer from my checking account to my savings account.
- Keep windfalls as far away from your checking account as possible. If you are lucky enough to receive small windfalls, such as birthday money, tax refunds, money from the sale of items on eBay, etc, be sure to put that money directly in your savings account. If it finds its way into your checking account it will likely be frittered away.
- Save one dollar bills. Most dedicated savers have a coin jar at home where they dump change. Consider adding a dollar-bill box where you save all one dollar bills (with the exception of keeping a few around for tipping purposes). I heard of this idea on a radio show several years ago. The show’s host saved all one dollar bills he came across for years and presented them to his daughter on her 16th birthday. Up until that point she and the host’s wife had made fun of him unmercifully for his weird savings habit. After opening the box with sixteen hundred one dollar bills they no longer made fun of him.
Hopefully, I have given you some ideas for jump starting your savings plan, but you are the one that has to do the heavy lifting. Saving money is a function of spending less than you earn, and storing the difference. It does not matter how much, or how little, you earn. If you find yourself unable to save money because of low earnings, consider finding a side hustle, or selling some items to supplement your savings plan. The bottom line is to simply get started saving something, today!