Saving money will always be the root of any sound financial strategy. This year, make it a point to be savvy with your funds. Here are a few tips to get you started.
There are plenty of reasons why you should be building that rainy day fund, while looking to cut those less-than-frugal spending habits. Regardless of your current needs or future financial goals, stowing some money away – even if it’s a little at a time – can give you a sense of financial peace of mind, set you up for future successes, and encourage you to make wise choices when you do spend.
Why you should save
For your financial freedom Whether it’s a down payment on a house, a car repair, home improvement projects, a vacation or investment opportunity, when you have savings you have options to enjoy the lifestyle you choose or adapt to life’s unexpected events – in lieu of relying solely on credit cards, loans, or borrowing money from family.
For an emergency fund
Now more than ever, you should have an emergency fund for yourself and your family. It’s generally recommended that at least six months of income should be easily accessible for urgent needs, like an unexpected layoff or medical bill.
For retirement
It’s never too late or too early to start thinking about your retirement. You may already have a 401k at your place of employment or an IRA, but that doesn’t mean you can’t set aside more funds – either in a separate account or as extra contributions to these accounts.
For education
Saving for a child’s (or your own) education – whether college, trade, or non-traditional – is always a good use of your savings. You may look into making regular contributions to a 529, a college savings plan that offers tax and financial aid benefits.
How to save
1) Set goals
Think of something that you are saving towards or a specific amount that you want to reach and aim for it. Is it a down payment on a car or house? Is it $200 a month towards your emergency or retirement fund? Or even a small amount each month to be ready at year-end for holiday shopping? Don’t stray from your plan and if you happen to have a hiccup, it’s not the end of the world. You can try to make up for it in the next contribution. Seeing a savings strategy become more than an idea, and an actual accumulation of funds, is a good feeling and will help keep you motivated.
2) Stay on a budget
You should have a plan for what you do with your money every month so you can save the extra funds. Start with your living necessities (food, shelter, transportation, childcare, utilities, etc.) and go from there – calculate what you have left every week for things like entertainment, restaurant delivery, etc. Allot a small percentage of that monthly income for the unexpected like a home or car repair. And, if you don’t end up needing funds for the unexpected, roll them over for the next month.
3) Freeze your spending
Can you go a whole month without spending on unnecessary goods or services? Challenge yourself. It might not be easy to refrain from purchases you might be accustomed to, but there are probably plenty of things that you open the wallet for every month that aren’t necessarily essentials. Give it shot and see how far you can get and then put those extra funds towards your savings. You might surprise yourself.
4) Use the 30-day rule
Help control your spending by employing the 30-day rule. When you have an urge to buy, leave the store or website and let that urge sit with you for 30 days. When the time has passed, revisit this urge and decide all over again. Do you really need this item? You may discover that you actually don’t.
5) Reduce your debt
When setting goals and budgeting, consider your debt. You’re very fortunate if you aren’t carrying some kind of debt. If you are, try to pay off more than the minimum payment required on it. Depending on how much you owe, it may take a while. Most importantly, don’t let it discourage you from saving some money each month. Think of it this way: when you have less debt, you’ll be able to save more.
6) Consider refinancing your mortgage
With rates historically low, it might be a good time to refinance your home. By doing a little research, you’ll find out how much you can save by comparing today’s rates to what you’re already paying. Given how low the rates are currently, you’ll probably be able to find a lower rate. You should also consider other factors when making an eventual decision like closing costs, loan terms, and the current amount of equity you’ve built up in your house. If you need more information or would like to talk with an Atlantic Union Bank Mortgage Loan Officer in your area, visit https://www.atlanticunionbank.com/mortage
7) Cut expenses
Take time to evaluate where you’re spending your money and what you are getting in return. Can you get a lower rate on your cable TV, streaming services, or mobile phone? Take a look at your utility bills and monthly auto-pay debits. Maybe there’s a subscription service you can cancel. If you order food delivery three times a week, try to make it two instead. Have you been splurging on unnecessary online shopping items during the pandemic? Lots of people have been, but maybe you can cut back or stick to essentials. It doesn’t hurt to adjust your lifestyle if it’s going to save you money in the long run.
8) Automate savings
Saving money is easy when you don’t actually have to do anything. And it’s important to pay yourself first. Have your employer divide your direct deposits between your checking account and savings account. For example, you can have 90% of your paycheck go into your checking account and 10% go into your savings account. You can also have your bank automatically transfer funds from your checking to your savings account in small increments over the course of a month.
9) Use a savings calculator
Tools like the Atlantic Union Bank Savings Calculator can track your progress and help set goals. It’s easy to use! It can show you how you can grow savings and what the best strategies might be to help get your savings to where you want them to be.
10) Pay yourself
Consider anything over your regular paycheck as funds for allocating to your savings strategy. These might include your tax refund, a holiday bonus or gift, an extra shift you picked up at work, etc. Put those funds directly into your savings before spending them on anything – at least until you know what you might use them for.
11) Sell stuff
Your garage, your attic or your closet might hold hidden treasures to those in the online world. If you can part with some no longer needed keepsakes, clothing or household items and sell them safely, think about what you might be able to move in an online marketplace. You might make a good amount of cash to put towards one of your savings goals while also decluttering your living or storage space.