Saving Money putting coins into a jar.

How to Save Money?

Whatever the reason, learning how to save money is essential for your personal financial health. It is critical to your financial stability to have access to cash without the need to borrow.

Here are some tips for building a better savings habit: Review your monthly expenses, Budget your income, Set savings goals, Research financial tools, Automate your savings, and Monitor and review.

  • Review your monthly expenses.

Each month, you will have both fixed and variable expenses. Your fixed expenses are unlikely to change, but your variable expenses are critical to identifying opportunities to increase your savings.

  • Budget your income

After taking note of your expenses, budget for your weekly/monthly savings. Your recorded expenses should help you understand your monthly income and expenditure profile. Based on this you can locate where you can cut your expenses and put that unspent cash toward your savings plan. Note: (Not eating out as often and canceling subscriptions to unnecessary services can be significant money savers)

  • Set savings goals.

These will be different for everyone, but they will guide your savings process. Creating a financial plan can help you outline your savings goals. Short-term goals such as saving for a vacation, creating an emergency fund (covering 3-9 months of your expenses), or a down payment for a car are achievable in 1-3 years depending on how aggressive and disciplined you are with your savings. Longer-term goals such as saving for a home down payment, your child’s education, or saving for retirement may call for less aggression but more consistency over a longer period of time.

  • Research financial tools

Research different financial savings plans. Aside from your usual savings account at your bank or credit union, there may be savings accounts with higher interest rates or more flexibility that can benefit you outside of simply setting aside your savings each month. Higher interest rate accounts can offer you more return on your savings. Insurance savings policies not only allow you to save money but benefit from insurance coverage in the process. Getting advice on these financial tools can give you additional benefits on your savings plans.

  • Automate your savings

Automate your weekly/monthly savings. By having a predetermined amount of your income automatically sent to your savings account(s) you don’t have to think about the temptation of spending your money that has been reserved for a purpose. This can help make it easier to create the consistency you need over time and help you reach your savings goal within your planned time without delays.

  • Monitor and Review

Ensure you are sticking to your plan. No matter the goals you have, the method you take, or the savings tools (account type) you use, monitoring your progress and ensuring you are on target is important to your success in both the short and long term.

Building your savings doesn’t have to be a difficult process. You should ensure you do it in a way that is sustainable for your needs. This will make it easier for you to meet your savings goals across time. TheFinRoute can connect you to financial advisors to help you develop the financial skills you need. The easier they become, the easier it is to stay on course and keep focused on achieving your goals. 

For more tips on saving money, click here.

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