We have learned a lot during this unprecedented pandemic. The lesson that has been clear is that we need to always have savings set aside for a rainy day.
Saving is difficult hence only a handful people actually save something for a rainy day. Most people believe that they can only save money if they are earning more than they need. However, saving takes sacrifice. You would have to deny yourself luxury in order to put money into your savings account.
Costs add up fast, and building your savings can seem like a pipe dream. But small changes now can yield big benefits later. Below are basic steps to start making meaningful progress toward a brighter financial future.
Think One Percent at a Time
To start and build a good saving trait, you need to be systematic with your plans and take small but calculated steps which will eventually turn out to be a fat savings account.
You can start by only putting 1% of your income into your savings account. You will barely feel this income cut but then you would have started a saving routine.
By saving only 1%, you’ll flip an important mental switch: Before, you were someone who wasn’t saving for the long term, but now you are. That’s a key difference, because it’s much easier to ramp up your savings if you’ve already formed the habit. So however modest, take the first step.
Analyze Your Budget
When you look at your income and expenditure you will be convinced that you are not making enough to sustain you, let alone saving. However, if you take a hard look at the money you spend and the importance of the things you spend money on, then you realize you can actually have money to save.
Look at the money you have spent in the past month then divide the expenditure into two categories; ‘need’ and ‘want’. Go through your wants and see what is really important.
Why must you have pizza every Saturday? Why must you have a night out every day? Reduce your expenses and create space in your budget for regular saving.
Your Future Self Should Be Your Priority
If you are looking to start saving, it obviously is to make your life better. Constantly thinking about how your future self will have a better life is motivation to start saving. Your present self has to make sacrifices for your future self to have a better life.
Each month, you pay regular bills; your electricity bill, your rent, your student loan. Why not add your future self to that list? When you treat savings as mandatory, you make it much easier to stay serious about staying on track.
Make it Automatic
Once you’ve figured out how much you want to save each month, and you’re confident you’ll pull in enough income to meet that goal, you can set up automatic transfers between your checking and savings accounts.
By automating deposits, you can eliminate the temptation to redirect your extra money to other things.
Slow and Steady, A step at a Time
A journey of a thousand miles begins with one step. Saving for a down payment on a house begins with one shilling. Owning your own house or buying a car can seem to be an impossible hurdle but if you take it slowly and keep your discipline, then you will definitely achieve it.
Remember you can achieve your most ambitious savings goals if you work toward them gradually and in small increments. By forming the basic habit of saving and by sticking to specific, attainable goals, you’ll lay the groundwork for a lifetime of financial progress.
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