The key to saving successfully is to have a plan. Like most financial details, it should not be left to chance. Most of us know we need savings, but the discipline required to make it happen can be a challenge. Make this your year to save by following these simple tips:
One of the biggest obstacles to saving money is the debt you carry. Those who live debt free have more discretionary income, and greater savings. What can you do to reduce or eliminate your current debt burden? Look at your mortgage, car loans, and credit card debt, and set out a road map for paying them off. Once you are free from paying interest on your debt, that money can easily be put into savings. Look for ways to refinance, consolidate debt, or increase the payments you are making, with a goal of carrying as little debt as possible. Or better yet, living debt free.
Before you can start to set money aside, you need an understanding of how your current income is being spent. In addition to paying down your debt, what are some of your other recurring expenses? Don’t just look at what you pay per month. Annualize your spending, so you know how much you are paying per year. If you spend just $3 a day on a coffee, that adds up to almost $1,100 each year, for example. You may be surprised by how much your monthly expenses add up each year. By tracking expenses and looking at the big picture, you will know where the bulk of your money is going, and can identify opportunities to cut back.
Arrange a No Spend Day
It can feel intimidating to think about saving when you have so many expenses to cover. One simple way to save is to commit one day a week where you will not spend any money. Don’t just skip the coffee at Starbucks. Plan not to buy anything that day. No meals out. No online purchases. No errands. No gas in your vehicle. No bill payments. Pick a day of the week for a recurring spending moratorium. If you set just one day aside, the savings can really add up.
Conduct an audit of all the subscriptions you are paying every month. Do you currently have Amazon Prime Video, Disney +, and Netflix? Do you need all three? There can be a lot of overlap with subscription services, and sometimes we sign up for things we forget about and don’t even use. Reviewing your monthly bank statement can help you see how much you are spending overall on subscriptions, and give you the opportunity to save by cancelling the ones you don’t need or use. Remember that with many of these services, renewal is automatic. You have to cancel by a specific date, or the payments will keep on coming.
Inspect Your Home
One of the greatest opportunities to save may lie in your home. There are many ways to improve energy efficiency: appliances, doors and windows, insulation, light bulbs, programmable thermostats. Conduct an energy audit, or bring in an expert to help. There are changes big and small that can be made to lower your energy costs. It may seem counterintuitive, but sometimes you need to spend in order to save. The long-term benefits of making improvements to your home will pay off. They can even lead to lower insurance premiums, so be sure to reach out to your provider once you’ve made those upgrades.
Establish A Goal
Once you have identified all your expenses and looked for ways to cut back, it is easiest to work toward a specific savings objective. When you are focused on a target, you are more likely to stick to your plan. What you need to save will depend on your specific circumstances. If you do not currently have any savings built up, you should work toward developing an emergency fund. Once that has been established, maybe you have a trip in mind and want to set aside cash to cover it. Long-term savings should always be top of mind as well. But without a target, you can’t set yourself up for success. Set a practical goal and a stretch one. No matter how much you save, you will be building a vital foundation.
Follow a Budget
With a savings target in mind, you’ll know how much you need to save, and can work that amount into your monthly budget. Just as it is wise to plan for established and unexpected expenses, you want to save with intention. Building a set amount for savings into your budget helps ensure you follow through and increases your chances of meeting your goal. Don’t think of saving money as optional; it is an essential part of financial management. With a line item in your budget, you can’t forget or ignore you goal to save.
To plan your household budget, check out our calculator: https://www.ffbf.com/calculator/home-budget
Automate Your Savings
A great way to set aside money is to make it automatic. Plan to pay yourself regularly. You may choose to wait until the end of the month to see what kind of a surplus you have, then transfer money from your checking to savings account. You can also set up an auto debit each payday. Just as you dedicate a portion of your income to a 401(k), for example, you can allot a specific amount to your First Federal Savings Account. Both kinds of savings are essential for a solid financial base.
Utilize Online Bill Pay
With First Federal’s Enhanced Bill Pay, you can use your bank accounts in lieu of credit cards, which will help you avoid accruing debt. Select the convenience of eBills, saving money on stamps and making your payments more secure. Set up automatic payments for regular expenses like your mortgage, cable, or cell phone bill, and you’ll never pay late fees again. Your bill history will always be right at your fingertips, making tracking expenses and setting a budget easier.
First Federal offers a wide range of savings account options to fit your needs. We make saving easy. The more you save, the more you can earn, with competitive rates that will reward your efforts. You can also purchase a Certificate of Deposit (CD), an excellent way to set aside money and earn interest. Stop by your local branch today to discuss which options would best serve your situation, and let First Federal partner with you to help accomplish your savings goals!
These are just a few steps you can take to start on the road to saving. Once you begin, you may be surprised by all the opportunities to find to save money in your day-to-day life. It takes dedication and hard work, but you will never regret setting yourself up for a secure financial future.
Here's a general savings calculator, to get you started: https://www.ffbf.com/calculator/savings