Saving and budgeting are the stepping stones to a financially secure future. But as essential as savings are, disciplining yourself to start can be difficult. Especially in this day and age, when technology has made spending so much easier. Fortunately, there are some simple steps you can undertake to ensure you develop a saving discipline.
Create and follow a sound monthly budget
A budget is just a spending plan tailored to your needs and your long-term financial goals. Its primary feature is to help you enhance your savings by highlighting areas where you overspend. importance
A stepping stone to great financial success, you mustn't ignore the importance of budgeting. The key to making it work is to be realistic. Create a flexible budget and recognise that it will change as per your needs.
Furthermore, learn to identify the difference between your needs and wants. For instance, do you need to eat out three times a week? Such cuts in your budget go a long way in upping your savings game, securing your financial future.
Another great way to succeed in budgeting is to set specific goals and action plans. Saying, ‘I will eat less outside’ is a target you will miss. However, asserting ‘I will only eat out once a week’ is more likely to work.
Identify your financial future, your long-term goals
Identifying your goals can serve as a huge motivating factor for boosting savings. Recognising what you want to achieve with your money, like a car, a home, a peaceful retirement, quality education for your kids, can set you in the right direction. It has been far more effective than simply putting money toward that vague category of “savings”. Create a timeline and map your progress. Knowing what you stand to gain in the end can urge you to make sacrifices today.
Maintain a separate account for all your savings
Giving a specific name to your bank account, such as “Holiday” or “Child's college,” might help you hit your savings targets earlier than anticipated.
Such demarcations also remove all temptation from using that money for any other purposes, allowing your savings to grow smoothly. It also helps you map your progress, alerting you to how much more you need to reach your goals.
Automate transfers - make use of technology
Setting up automatic transfers to your savings accounts ensure you are saving consistently. It is a relatively simple procedure, where you need to instruct your bank to transfer a fixed amount, on a set date every month. You won't have to remind yourself to make the transfer every time you get paid, thereby ensuring you develop a smooth saving routine.
Make it harder to spend
When it comes to savings, the lack of sufficient income is hardly ever the problem. Usually, it is a function of our spending habits. Luckily, controlling spending is a lot easier than finding an alternative source of income.
There are many ways to curb your spending. Top of the list; make it harder to spend. And there are several ways to achieve this.
Use cash in place of cards. Cash is known to be a big demotivator to spending. Multiple studies highlight that people who use credit cards are more likely to:
forget how much they spent on purchases, and are willing to pay more for the same item
than those using cash.
Enforce a waiting period for all your purchases. Mull it over, so you don't suffer from buyers remorse. Avoid saving your credit card information on websites to make it tedious every time you make to purchase.
Make good use of your bonus payments
If you can get away with your monthly income, don't squander away your entire raise or any bonus payments on things you don't need i.e. your wants. The trick is to use a part of it to fulfil any wants, and allocate a larger chunk towards your savings.
Developing a saving discipline early on in life can go a long way in achieving your long-term goals. Starting to save and invest early will give your money that much more time and potential to grow, putting you on the fast track to realising your financial goals.