Boost your savings with these helpful habits
Last updated: January 1
Most of us understand the basics of savings: spend less money than you make. But in practice, it's not always as easy as it sounds. Maybe you aren't saving as much you'd truly like to, or you want to build an emergency fund. Whatever your saving goals may be, there are some simple ways to help set yourself up for success.
Here are four habits that may help you boost your savings.
1. Set a budget
One step toward increasing your savings is to set a budget. Having a budget in place can help you see where your money is going and give you an idea of how much you could potentially be saving, according to the Consumer Financial Protection Bureau.
DaveRamsey.com recommends determining your monthly income, minus taxes and other paycheck deductions, such as 401(k) contributions. Then subtract your regular bills, such as rent, utility bills and car payments. The amount left is what you have left to spend on other needs each month, including food and entertainment. But don't forget about planning for quarterly or annual bills, like insurance premiums, and how much you want to save, too.
Once you have a budget, personal financial author Stefanie O'Connell recommends tracking every dollar you spend for at least a month. You can use a spreadsheet, smartphone app or even a pencil and paper. This can give you a realistic picture of where you're spending your money, says O'Connell, and help you keep future spending aligned with your goals.
2. Reduce regular expenses
Some expenses, like utility bills, cannot be eliminated — but you may be able to reduce them. For example, The Balance suggests contacting your cable or satellite provider to ask if there are lower rates available, or you could also consider switching to a streaming service that may cost less. Similarly, contact your cellphone service provider to see if you're eligible for a less expensive plan. If you're not using the minutes and data you're paying for, you could switch to a lower plan to save money, too.
There are other expenses that aren't essential, but you may not want to cut them out completely. For example, if your family likes to eat out regularly, consider cutting back. Giving up one or two meals at a restaurant each month probably won't feel like a big sacrifice, but if it saves you even $40 a month that's $480 a year you could add to your savings.
3. Take time to establish a good routine
It can take time to establish good financial habits. Be patient, and be willing to adjust to something that works well for your family. The Balance recommends evaluating your budget every month for the first six months. This will allow you to make adjustments if you overestimated how much you could cut in one area and see where you may be able to reduce spending even more.
Remember, you're in this for the long haul. Make sure your budget and habits are keeping up with your life and your finances. Set goals, review your budget regularly and adjust your habits appropriately.
4. Involve the whole family
Having everyone on board with the decisions you make can help your new habits become a success. DaveRamsey.com recommends having the whole family, including the kids, discuss the budget together. This can help them to understand what the end goal is and why you may be sacrificing some things they're used to, such as eating out regularly or frequently getting new toys. If everyone pitches in now and does their part, they'll also be able to share in the triumph later. And, hopefully, it will help establish good habits in your children later.
Saving money doesn't have to be overwhelming, and it doesn't always mean making major changes. By establishing a few good money saving habits, you can help yourself reach your financial goals