5 Tips to Jump-Start Your Savings Plan
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It’s human nature. We’re all wired to meet our immediate wants, whether it’s indulging in a tempting bowl of ice cream, spending more time than we planned scrolling through social media, or treating ourselves to an impulse purchase. Unplanned expenses or emergencies are other common life events. A car or house repair, or even a weather-related emergency, can make a dent in our budget. Whether it’s the struggle of delaying immediate rewards for greater benefit in the future, or an unexpected expense, people looking to build a successful savings habit often run up against these very human challenges. To help manage these realities, here are five tips we suggest to jump-start your savings.
1. Build Your Budget
To set yourself up for savings success, build a simple budget. Think of it as a road map that tells you exactly where you are in terms of monthly income and expenses, what money is available to save each month, and if you’re on track. A budget helps you monitor and track your financial progress. The most important part of your budget is updating and monitoring it regularly. Build it in a format that works best for you – using a smartphone app, spreadsheet or simple notebook. Keep it in an easy to find spot to track your income, spending and saving as you go forward.
2. Set SMART Goals
The SMART acronym provides a strategy for reaching savings goals that are Specific, Measurable, Achievable, Realistic and anchored within a Time Frame. As an example, depending on your specific situation, perhaps you can tuck away $20 each week to hit an annual savings goal of $1,000. Measure your progress each week and modify as needed. By keeping it SMART, you will more likely achieve savings goals when bite-sized amounts are saved over a realistic timeframe.
3. Manage Debt
Many people find it hard to save money when struggling with high credit card debt. The longer you carry large balances, more of your monthly payment is applied to interest and the less you have to tuck away in a savings account. You will save the most money by starting to pay as much extra as you can on your highest-interest debt first, and then once that’s paid off, move on to your second-highest interest debt, and so on. If you’re struggling to make a plan to repay debt on your own, there’s help! Working with a trusted national nonprofit like GreenPath Financial Wellness is proven to help people manage debt and jump start savings.
4. Build Your Emergency Fund
A savings plan should include building an emergency savings fund to handle unexpected expenses and setbacks that can come up suddenly. A general rule of thumb is to set aside three months’ worth of living expenses in your emergency fund. This buys you some time if something were to happen. If that isn’t realistic for your situation, start with what you can. It’s most important to get into the habit of prioritizing your savings and to begin making progress. You don’t have to bite off the whole goal all at once.
5. Set it and Forget It
The most successful savers automate monthly deposits to make it as painless as possible. Decide how much you can put into savings and set yourself up with an automated transfer. Another good option is to automatically direct-deposit a portion of your paycheck into savings every payday. Begin with an amount you can afford to put into savings and look at your big-picture plan to set your savings goals in the long term.
Ready to open a Savings account?
This article is shared by our partners at GreenPath Financial Wellness, a trusted national non-profit. GreenPath offer’s professional, caring financial coaches who can work with you to create a savings plan. GreenPath also offers free debt and credit counseling. If helpful, a Debt Management Plan can lower your interest rates and fees, help you save money, and pay off your debt faster.