As you get older, you inevitably have more and more things to pay for, most of which aren’t cheap. Although everyday budgeting can deal with your everyday problems, larger unexpected issues can require a lot of money to fix. Whether it’s a car issue, medical expenses, or a problem with your home, sometimes you need access to money in times of desperation. As a result, having savings put away for times of crisis is essential.
Yet, how do you put away savings if you’re already struggling financially? Here we offer you some tips!
Start sooner rather than later
Although it’s easy to put off saving, especially when thinking about retirement, it’s better to start early. Save and invest as much as you can now, because it’s a good idea to let that compound interest start building up early, creating a snowball effect which will only accelerate down the road.
Automate the saving process
If you’re trying to save money, whether it’s for retirement or for the simple security of having a fund put away, it may be a good idea to take your own free will out of the equation! There are now numerous automated funding services which allow you to make scheduled contributions of set amounts to your preferred savings account, meaning your money will leave you straight away without you having to do anything.
It’s easier to part with money which you “never see” than it is to part with money which you do. If you’ve ever had to pay your own taxes, you’re no doubt familiar with this feeling. Sending away money manually can lead to separation anxiety – it’s much easier to automate the process and never have access to it in the first place.
Look at your budget
Sit down and look at your monthly budget, being prepared to make some tough cuts across the board. Look at all of your outgoings every month, particularly those which are regular or directly debited from your account. Paying for a gym membership which you never use? Go to the gym or ditch it. Paying insurance on a device which you very rarely use? Consider canceling the premium. Be realistic about your budget, and make sure that you are able to live within your means on the amount of money that you have coming in every month. Only once you control your budget and live within your means will you be able to set aside money for a rainy day.
Cut unnecessary spending
Here’s a harsh reality – what a lot of people think of as “necessary spending” is simply a waste of cash. Although some things are essential, others are not. For example, if you buy your lunch from a café while you’re out at work every day… why? Make yourself a packed lunch from store-bought ingredients and you’ll save yourself a small fortune. This might sound trivial, but if you save $5 every day by taking a pre-packed lunch to work, that’s $1300 over the course of a year. Simply packing a lunch could save you over a grand!
Be critical of your spending and carefully distinguish between what is “necessary” and what is simply considered “normal” by most people. Guess what? Most “normal” people are terrible at saving money because they’re buying $5 iced coffees numerous times a day and wondering why they’re broke.
If you want to achieve your savings desires, you need to set about coming up with realistic goals for your savings going forward. It may be worth using a financial calculator or working with an advisor in order to come up with these goals, but rest assured that it can be done.
When setting your goals for your savings, make sure that they’re specific and actionable. For example, having one meta-goal of “I want to save money” isn’t very helpful, while saying “I will save $50 per month by switching car insurance provider” is much more specific and reachable. Set yourself some milestones and make sure that you plan out your journey instead of having a vague goal and expecting savings to magically start appearing out of the ether.
It doesn’t matter if you’re saving for retirement, a vacation, Christmas, or a rainy day – saving money is difficult for everyone. Nonetheless, if you’re looking for advice on how to save money on your insurance premiums, contact a member of our team today.