Most people have ambitious goals when starting to save money. Perhaps you want to have sufficient emergency funds, buy your own home or afford to take your family on vacation. But are you putting your best foot forward? What financial habits can help you?
Financial experts warn that it's the little habits that fail people from hitting their monthly, weekly or annual savings. And here we're not talking about overhauling your entire lifestyle. These are easy changes that you can comfortably incorporate in your day to day life.
So what are these financial habits that can help you save money?
Change Your Mindset
Most people don't save because of these reasons:
- After subtracting taxes and paying bills, your paycheck may seem too small to save.
- Spend what you earn first, then save what's left.
- When income increases you put off good financial habits until "later."
Imagine how much you can save if you took another cut of your income after paying bills and channel it to your savings account. And to make it even better, wouldn't you reach your goals sooner if you saved any salary increment?
Set Specific Goals to Save Money
When practicing, athletes imagine themselves competing in championships. It keeps them motivated and focused on winning.
Similarly, one of the best financial habits to have is to set goals. You should set specific goals to help you save money. Knowing how you intend to use your money gives you a clear picture of how much you should save and increases your chances of achieving your target.
Seasoned financial experts recommend having a five-year plan broken down into monthly targets. For example, if you want to save for a house down payment in 1 year, get the big figure and break it down to monthly goals.
Adopt Good Heuristics
"Heuristics" are simple, easy to follow financial rules that you just create for yourself. For instance, you can state that you cannot spend more than $30 on shoes.
These rules make everyday choices simple. It can help you develop great money-saving habits in the long run.
But if developing great heuristics proves to be difficult, start with something simple, like eating out twice a month. It can be wise to write them down so that you can always read them before going shopping.
Save Money For Retirement Now
Retirement can seem to be many years away if you're in your twenties and thirties. And as such, you may not prioritize saving for retirement. But you're taking a huge risk.
The sooner you start saving the more money you will have. For instance, if you save $50 per month at the age of 30, it can turn into $50,000 in the next 30 years.
Increase Your Income
Earning more doesn't always lead to saving more unless you change your lifestyle. But if you build your income and save some of those earnings, you can boost your savings significantly.
And one way to do that is by diversifying your sources of income by taking on a working part-time or starting a side gig. Just pick something you enjoy doing to maintain your productivity.
For example, if you're an architect who loves gardening, you could take on a gardening job on Saturdays. That way, your second employer gets a dependable employee and you get to do something you enjoy and get paid.
Consult A Financial Expert to Save Money
Let's face it. Some of us are too involved emotionally with our finances to make the right decisions. This is usually common when you're supporting your loved ones or you have poor spending habits.
In such a situation, consulting a financial expert pays back in spades. Apart from keeping you on track, an expert can also help you see the bigger picture.
It's not how much you earn but how much you save that counts. But to save more, you must be disciplined financially. These tips can help you achieve your saving targets sooner.