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Follow these tips to kick-start your savings plans.
Tip #1: Set realistic goals
As with New Years Resolutions, it’s better to have specific, measurable, and incremental goals than a vague wish list. Prioritize your goals and break them up into smaller ones. For instance, if one of your long-term objectives is to save for the first six months of retirement, figure out how much that will be and sock away a specific amount at fixed intervals. When you achieve that milestone, reward yourself with a special dinner or make an announcement to friends and family (whatever you do, don’t spend a bunch of money to undercut your success).
Tip #2: Make savings automatic
The best way to save money is to not think about it: Automatic savings typically works best when your income and expenses are fairly predictable. Use tactics like direct depositing a portion of your paycheck to a savings account every week or month. Another benefit of automatic savings: once you get the process in place, it will be more effort to stop the payments going through every month than continue growing your account.
Tip #3: Start or increase your emergency savings account
The rule of thumb is that three- to six months worth of savings is the minimum amount for an emergency account. This calculation is based on the average length of time it takes to get a new job, should you become unemployed. However, only 1 in 4 Americans have an emergency account and more than 25% have no back up funds whatsoever. Beyond planning for times without a job, your emergency fund can be used for life’s unforeseen events, such as a major car repair, sudden medical bills, or other unwelcome financial surprise. It’s always better to pull funds from a back up account than from your savings account.
Tip #4: Stock up on “found” savings
Another savings tactic that can be effective is to put away the money that you have cut from your budget, or conversely, money that is “free” to you. Some examples include: if you switch to a cheaper internet plan and save an extra $25 every month, add that into your automatic savings plan (see Tip #2). Or conversely, if you get a $500 raise a month, rather than going into “abundance shock” and spending it, include it into your automatic savings plan and grow your account balance even faster.
For more savings tips, contact your credit union representative.
Get more tips at America Saves and BALANCE Financial Fitness
*Information in this article has been supplied from America Saves and BALANCE