You’re now at the point where you’re finally making good money and you’re ready to make some big financial moves in the future. You might want to save up for a house. You might be in the market for a new car. Either way you’re looking to start saving more money for what’s next in life. You just need to create savings habits that will prevent fund withdrawal every two days from your bank account. How can you get into the habit of saving money consistently?
Pay yourself first.
The only way that you’ll ever save any money is if you do so immediately upon getting paid. Fund withdrawal from your paycheck into your savings account is the absolute best way to save money. The reason that this is the case is simply because you’re forced to put this money aside before you get a chance to spend it. Believe me, as a 20-something you want this money to be away from you because you’ll spend it for sure. The best way to pay yourself first is by going to your employer and setting up some sort of automatic deductions. This means that you won’t even see the money. The money will go straight into savings vehicle that you choose.
Cover your expenses.
Your expenses need to be accounted for in a timely manner. We all have fixed and variable expenses. Fixed expenses are the bills that we know we have to pay monthly. These usually include your cell phone, rent, hydro, car insurance, gym membership, and any other subscriptions. The variable expenses are those that might pop up randomly or ones that occur rarely. Fixed expenses are easy to account for because they’re almost always the exact same. Variable expenses vary on a monthly basis. One month they can be at zero and then the next month they can hit over $1,000. If you want to create a solid savings habit, you need to prepare for all the expenses that will come your way.
If you don’t plan for your expenses they’ll creep up on you. When the expenses creep up on you that might mean having to pay for them with your credit card or making late payments. Both scenarios are not ideal.
Set aside some money for fun.
You need to have fun. Saving money doesn’t have to be boring. You also don’t want having a good time to be one of the four reasons why you’re broke. This is why I’m a huge proponent of putting some money away from each paycheck towards having fun. Now I know that everyone has a different sense of fun. Some of us find it fun to go rock climbing, others want to get completely drunk at a night club, others want to play board games with friends. Regardless of what you do for fun, you should plan for it accordingly. It also helps to be realistic when planning how much you’ll spend on entertainment. Too many times have I told myself that I’ll only spend $40 when I go out only to find myself $100 poorer at the end of the night.
Increase your income.
If you want to pick up your rate of savings the best way to do so is by making more money. A couple of years ago I found myself in a situation where I was saving money on everything possible. I would rarely go out, I would eat at home all of the time, and I would honestly be cheap most of the time. It then hit me that I didn’t want to live my life this way. At that point I made an effort to earn more money. Once I started to earn more money I found myself in a situation where I could go out often and still meet my savings goals. A win-win situation.
Now if you’re stuck for time like most of us are these days, allow me to share two quick ways you can improve your income right now:
- Ask for more shifts. You can always go to your current employer and ask them to increase your workload. You can increase your workload in terms of time. You can also try to increase the quality of the work that you do in an attempt to make more money. Both options can work.
- Find part-time work. If you’re already tired of spending 8 hours daily at your current workplace, you can find part-time work. When I was in high school I used to work at a retail store. I remember an older gentleman got hired. I asked him why he would want to work in such environment. He explained to me that he wanted to make some more money on the side and he really just wanted to get out of the house more often.
Once you pay yourself first, cover your expenses, plan for fun, and increase your income, you’ll be well on your towards creating solid savings habits. What are you waiting for?
What have you done to create savings habits? Do you have any tricks that you can share with us?
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(photo credit: lain farrell)