Do you want to save more money this year? The first step to starting to save is to figure out how much you spend. To get a snapshot of where your hard-earned money is being spent, keep track of all your expenses for a month. In addition to obvious large expenses like your rent or mortgage payment and utilities, don’t forget to track every latte, magazine and pair of shoes you buy.
Once you know where you are spending your money, organize your expenses into a budget. Creating a budget will outline how your expenses measure up to your income so you can create a spending plan. In addition to your monthly expenses, include expenses that occur regularly but not every month such as semi-annual insurance premiums. Of course, this budget should also include a category for savings, which should ideally be 20 percent of your income.
Saving can be tough. Here are three tips to help:
Set a savings goal. What do you want to save for? Do you want to buy a home and need a down payment? Hoping to take a tropical vacation? Need an emergency fund? Having a savings goal will help keep you motivated. Try to determine the amount needed to accomplish your goal so you can budget how much to save each month. For example, want to take a trip somewhere warm next winter? If the trip will cost $5,000, you will need to save about $400 each month.
If you are saving for a long-term goal such as a down payment on a home, consider using a Certificate of deposit (CD), which locks in your money at a specific interest rate for a specific period of time.
Save automatically. Setting-up automatic savings is an easy and effective way to save. Every month or every pay period, have your bank transfer a fixed amount from your checking account to a savings or investment account. You can also have your employer direct deposit a certain amount from your paycheck into a savings account. By putting this money into a savings account right away, there will be less temptation to spend it.
Stay motivated. Remember saving is a lifelong process. Having both short and long-term goals can help keep you motivated. Saving for a pair of shoes and paying cash will be even more rewarding than impulsively making a purchase with a credit card and paying the bill for months to come. Keep in mind that surprises happen. That is another reason we save. If an unexpected expense occurs, remind yourself that even if it feels like you’ve taken a step back by dipping into your savings, you’ve really already taken two steps forward by simply saving in the first place.
Ready to start saving? Univest Bank and Trust Co. can help you with a variety of accounts. Contact us at 877-723-5571 to learn more.
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