*From time to time, someone from the personal finance blogosphere will reach out to this blog and ask to write a guest post. Today, we have James Paul over at Basic Finance Care. He has some basic steps on how one can think about saving for the future.
“Saving” is a word which often makes us worry about. We are tired of hearing it from our elder generations to learn to save. With the onset of overpricing, costs keep adding up so fast and saving seems like an impossible task.
How to get started?
We share with you the following tips from the experts combined to form a 5-Step guide to help you to get started with saving. Few changes in your current lifestyle can make a huge difference to your future financial status.
A meaningful quote by Warren Buffet:
“Do not save what is left after spending; but spend what is left after saving.”
Your 5-step guide:
Follow these 5 steps to begin your savings journey for a financially secure future:
Step 1. Begin with a 1 % thought
Whenever you start the journey towards savings, it’s better to look for 1 % saving. Once you get your pay check contribute 1 % of it towards savings. It’s a good way to start with and 1 % will not really change all your usual routine. Instead now you’ll have some amount in your savings and at the end it matters. Mark your beginning with a small chunk that makes up your saving.
Step 2. The 3 stage process: Analyze, record and organize
Saving depends on your expenses!
The more your expenses are, the less you save. To understand this in detail you need to follow the 3 stage process:
· Before you start putting some amount as savings, you need to analyze your spending habits.
· Track down all the expenses be it your coffee or rentals etc. Once you have the records then start analyzing where you’re over spending and can save more. Start differentiating between your “needs” and “wants”. You can always rethink about your “wants” and cut it wherever possible. · Now, organize it into a workable budget and keep a separate column for regular savings.
Step 3. Your future lies in your priorities
You might be paying regular bills monthly such as rentals, student loan, cell phone bills etc. Paying bills on time will avoid unnecessary extra charges but setting up priorities would make a difference. Clearing all current debts is necessary but don’t forget to add someone to your priorities: your future self.
Once you prioritize your needs you’ll know how much you can contribute for your regular savings. This will help you achieve your financial goals faster.
Step 4. Follow the trend with automatic options
It’s always better to stay and move with the trend. Most banks come up with free apps that can be downloaded in your cell phone to access your banking account online. Mobile banking has become so handy that people handle most of their transaction with just a click.
Now that you have a mental figure of how much you can save every month, and you’re confident that you can meet your goal, then opt for automatic transfers between your checking and savings account. You can set up an amount to transfer every month on a fixed day. You don’t have to worry about forgetting and when you see it after a period of time; you’ll have some good savings in your account. By opting for automatic transfer, you can eliminate the chances of getting tempted to use the extra cash for some other “wants”.
Once you make savings a mandatory thing in your monthly list, you’ll get serious about it and learn to be on track without the worry of finances.
Step 5. Slow and steady wins the race!
You might have bigger goals just like others but how to save for those goals would be the biggest question. You would want to save for a down payment on a house, a vacation to your dream destination, a car loan etc. which might seem like an arduous task. Remember that you can achieve your financial goals with little efforts and perseverance. The small increments that you add to your saving would make a big difference on the whole.
Gradually, start working towards your goals and cultivate the habit of regular saving. Every now and then check your account balance to see how much you’ve saved. This will motivate you to save more. Compare it with the stage you were in, when you had no savings. Your efforts have shown results and now you also have some savings in your account.
Saving is not a day’s job; it’s a continuous process. If you follow these simple steps then you would understand how to save, but making it effective lies in your hands. Initially, you might lose interest to follow but if you work with motivation then the results will be fruitful. Start today, it’s never too late to save.