A pile of money | Karen Bleier/AFP/Getty Images
1. Start small
Try not to be overwhelmed by expert recommendations. Although it is best to have at least six to eight months of emergency funds, it’s OK to start saving little by little. Savings.com DealPro and founder of personal finance site The Centsible Life, Kelly Whalen, says even stashing away just $5 each week can get you in the savings habit:Try saving small to start. Even if you can only sock away $5 to $10 per week it will make it easier to pay for an emergency when it does come up. That little bit can add up faster than you think!
2. Budget for the fun stuff
Deprivation is a sure way to blow through your cash. When you feel deprived you’ll just want to spend even more. So allow yourself to purchase a few wants in addition to your needs. Matt Becker, financial planner, founder of Mom and Dad Money and author of The New Family Financial Road Map, says this is the key to making life more enjoyable:Make sure you save for things you want in addition to saving for the things you’re “supposed” to do. That could be saving ahead for travel, a house, the next iPhone, or whatever it is that makes your life more enjoyable. Those fun savings goals will make it easier to save for the other stuff as well. Make it visual. Get a big glass jar and use it to store spare bills and change right where you can see it. I guarantee you’ll be motivated to fill that jar up to the top.
3. Reward yourself
Saving money won’t feel like a chore if you choose to make it more enjoyable. One way you can add some enjoyment to the process of saving money is to set up a rewards system. This way, you’ll actually start to look forward to putting away your cash. Paul Vachon, founder of personal finance site The Frugal Toad, recommends inviting your family to join in on the fun:Saving money can be a bit of a challenge but here is a tip that may help to make it fun! Instead of focusing on [saving], make it a fun challenge for your family to cut spending. Build in rewards along the way for meeting certain savings goals as a positive source of motivation for family members. You may have to get a little creative, but you’ll be passing on important financial literacy skills to your children that will serve them well.
4. Make savings automatic
Take the focus off of saving by setting up automatic withdrawals. When you don’t think too hard about how much money you’re giving up, it will be easier to save. Becker says willpower may not be enough to keep you on track:The idea of someday needing money for an emergency feels pretty vague and negative, while we all have a lot of both wants and needs that we can spend on every single day. It’s legitimately difficult to put money away for something that may never happen when you could be using that money on other things right now. Most people rely on willpower, manually saving whatever they can at the end of the month, if they remember and if there’s anything left over to save. It’s much more effective to set up an automatic contribution that moves money to a dedicated savings account on the same day at the start of every single month so that you make consistent progress.
5. Remind yourself that extra cash means more opportunities
When it becomes difficult to save money, remember that each dollar you save is bringing you one step closer to your personal goals. Becker says more cash on hand can translate into increased opportunity:Saving ahead isn’t just for the bad stuff. Having extra cash on hand also makes it easier to take advantage of exciting opportunities that come your way, like a new job, a cross-country wedding, or even starting a family. The more you have in savings, the more opportunity you have to make the life choices you actually want to make.
6. Stop spending for convenience
Don’t make a habit of spending extra cash just because it will provide conveniences (for example, you spend money on a taxi when you could walk). Think through all of your purchases and make sure the money you are spending is actually for a necessity. Whalen emphasizes that these little purchases can add up over time:Costs have risen incredibly in the past several years, so many families are feeling the pinch financially. Additionally we tend to spend on convenience which can cost us more than we realize.
7. Remember that not saving could put your future at risk
Although it might feel good to spend money when you want and where you want, it is not good for your financial health in the long run. Vachon warns against instant gratification:Not having an adequate emergency fund can put other savings goals like a new car, home, or a child’s education at risk if you are dipping into savings to pay for an unexpected expense. Having an emergency fund can also eliminate the temptation of using an expensive credit card which can also limit the amount you are able to put toward savings. Start building an emergency fund as soon as possible and set a minimum of two to three months of living expenses and focus your savings towards that fund. Once you have a minimum cushion of emergency funds, then you should invest at least the minimum required to get matching dollars in a company-sponsored retirement plan, and then focus on paying down any outstanding high interest credit card debt. If you have accumulated a large amount of debt it may take some time to dig yourself out of the hole you have dug, but by staying focused on your plan to save and reduce debt you will start to see results quickly!
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