When it comes time to tighten your belt, most notice that having money in savings makes it much easier to do. The process of budgeting expenses, and putting aside money in a savings account, is easy to understand in concept, but is much more difficult than it initially sounds.
You really need two basic things in order to set-up a budget: a savings account at a bank and a reliable stream of income every month. Other than that, all you really need to operate successful budget is will power- and that is what most people lack.
It takes dedication, and sometimes downright stubbornness, to stick to a budget for a long period of time. But, if the goal is to set aside money for your future, then sticking to a budget will be worth it in the end.
3 Tips for Developing Good Saving Habits
There are many tips and tricks that people can do in order to stick to their budget, and do it smartly. Here are three of the biggest tips you can take to get that savings account back on track:
1. Set goals and deadlines based on your budget
If you are really going to take saving money seriously, then you will need to also set-up a serious budget and be strict about it. There are no excuses, no ifs, ands or buts about it. In order to formulate a budget, you will need to analyze your monthly expenses and try to find out which parts of those expenses can actually be cut back. When making the budget, it is important to set some concrete goals. What are you saving money for? Is is to get out of debt? To buy a new car or rent a new place? retirement? Whatever the answer is, it is important to know what you want and when you want it. The goal will be the thing you will keep in mind whenever you are tempted to stray from your budget, and if this goal is important enough- you will be able to do it. Setting up a deadline for the budget will give you a concrete goal.
2. Pay yourself first
This rule does not refer to treating yourself anytime you do good and stay on budget, that is what the goal is for. Rather, the pay yourself first rule means that every time you receive any income or money, you immediately stick at least some of it in a savings account before you make any other payments. While this is an ideal, there will be times in which other debts should be paid before a deposit is made in the savings account.
3. Follow the 20% rule
The 20% rule is fairly simple and easy to follow. In many cases you can get your bank to do it automatically with every deposit made into your account. The 20% rule means that every time you get a paycheck or any other money, you put 20% of it into the savings account. You will be surprised by how effective this can be.
James currently attends a school to achieve his executive mba online and writes freelance in his spare time.