Having savings accounts is not just a nice safety net in times of economic uncertainty; it is an essential. However, religiously putting money aside can sometimes be difficult when finances are stretched.
While squirreling money away in savings accounts is nowhere near as exciting as a splurge in the stores, it is important for everyone to have some funds to fall back on, should the worst happen.
Many people describe themselves as poorly motivated to save and despite the best of intentions end up spending the money earmarked for their savings accounts.
The best way to save is to get into a habit and where possible, arrange for money to be stashed away before you can get the dollars into your hands. This makes spending the money that is planned for saving far harder to do.
A good way to do this is to set up an arrangement with your bank to transfer money from your checking account into a savings account as soon as you get paid, taking away the temptation to spend before you have a chance to save.
Economizing in household spending is another way to free up cash to put away for a rainy day. Even if you don’t have much spare money to put into your savings account, it is surprising how quickly small amounts can add up.
Shopping around for the best deal rather than always going to the same grocery store out of habit can bring a bagful of discounts and shopping online and saving on the gas can be a cost-efficient alternative.
Some people find that having a list helps to stop the temptation to buy things that aren’t really needed, as there is less inclination to browse when the mind is focused on finding the items written down.
For families or couples trying to save, a good way to get everyone motivated to join in is by having a pin-up board that shows all the money spent each week. Every time a purchase is made, the receipt is kept and pinned up on the board for all to see, which is a good deterrent for when the urge comes to blow the budget!
Another tactic some people employ to try and stop them from overspending is by implementing the 24 hour rule. If you see something you are desperate to buy, walk away and leave it for 24 hours. If, after that time, you still want to spend your hard-earned cash on the item, go ahead. The delay can dampen the enthusiasm for spending money.
It can be difficult to keep saving without an end goal so rather than have all the money together, some people prefer to have different savings accounts for different reasons.
It helps to have different goals for the short, medium and long term. By having something specific to aim for, it is far easier to see how you are progressing towards your target and this acts as a powerful incentive.
Examples of short and medium term goals might be Christmas presents, a vacation, an expensive personal item such as a games console or MP3 player, or a wedding. Long-term savings goals may include a retirement pot or funds for when the children grow up and go to college.
However, it can feel like a real drag having to save money and constantly economize in the meantime. It is therefore a great idea to set some reward points at regular intervals.
Once your savings reach the level you have pre-agreed, you are officially allowed to go and treat yourself to a small reward with a clear conscience.
It is possible for everyone to save money, no matter how squeezed their finances may feel and as the immortal saying goes – a little goes a long way.
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