There are two types of budgets. Most people think of budgeting as a way to control spending. Budgets can also be used to control saving. Many financial experts recommend setting a budget for saving at the same time a budget is developed for spending. Paying yourself first is one of the first steps to financial independence. Even if you have credit card debt, student loans or a car loan, paying yourself first through methodical saving is always the right thing to do. You’ll reap many rewards and begin to develop great financial habits.
Set a goal. Have you stashed away three months living expenses in case you leave your job expectantly? This should be your first savings goal. It will be easier than you think. Instead of being overwhelmed with the amount, break it down into smaller pieces. Set your monthly as one tenth of the total amount you need to save. In just ten short months you’ll reach your goal.
The smaller the savings increments and time line, the easier it is to visualize and realize your savings. Instead of looking at a daunting ten month time line, break it down into weekly goals. This is a much smaller amount that will seem more manageable. If, for example, your goal is to save $50 a week, this can be accomplished in several ways. They all fall into two categories: save more and spend less. Consider eliminating $25 worth of discretionary spending each week. This might mean forgoing your daily coffee shop or shopping for bargains at discount department stores with help from Groupon Coupons, instead of your favorite pricey boutique. You’ll be glad you did in the long run.
Treat your savings goals with the same importance as paying your bills on time. Set a line item in your budget each week for savings. Consider getting a short term, part time job. The advantage is two-fold. The more you work, the more you earn and the less time you have to spend your earnings! Follow these tips and in no time, ten months will have passed and you’ll have met your savings goal for a three month emergency stash. Keep it up and your savings account will continue to swell.