Tips on Building Savings and Planning Ahead
Building savings is never an easy task. But, with a little planning and a different approach, it can be made a bit more manageable.
Treat savings like a bill. Consider your monthly savings amount as a bill that has to be paid. Consider having the amount transferred automatically from your checking account or paycheck. Pay your account every month or every two weeks.
Think small. Many people don’t think their budget allows room to save, but even a small amount adds up over time. Depending on the size of your family, skipping a meal out each week could result in a $150 per month savings deposit. That’s $1,800 a year after taxes! Take a good look at your spending habits, and you probably can find $150 or so each month in extras that you could do without to build up savings.
Save your raise. The next time you get a raise at work or a tax refund, consider directing half to savings. If you’re not used to the money, you won’t miss it.
Participate in a 401(k) or 403(b) plan. If your employer doesn’t offer these plans, then you could start saving in a tax-advantaged IRA or Roth IRA account.
Involve the whole family. Even the youngest child can contribute change to the savings goal. It is easier for children to get involved if they understand why they must give up pizza night (or at least cut down the number of toppings!). Also, you are setting a good financial example for your children.
Plan a treat for you, your family or both when you reach your emergency savings goal. Make it something everyone will look forward to, but not something very expensive, like a day at the zoo or at the beach. The important thing is to mark the occasion and congratulate yourself and all those who helped.