Despite the need for savings to maintain stable finances, very few people in the United States set aside a portion of their income each month. A large part of the population in the United States is not prepared to deal with unforeseen events, much less to ensure their retirement.
Which side do you want to be on? Would you like to start saving money on a regular basis? Would you like to have a savings plan and be better prepared for the future? In this article we will share some very simple tips that will help you save without failing.
1. Set a goal
The first step in starting a money-saving plan is knowing what you’ll use it for. When you are clear about your objective, you can define amounts and dates. Obviously, your savings plan and how long you’ll save will depend on the amount you want to raise, so it’s a good idea to set short-, medium-, and long-term goals. You can start with simple goals of a couple of weeks and gradually build up to goals of months or even years.
When you set a goal, ask yourself the following questions:
- What is the cost of your goal?
- How much money can you save each month?
- How long will it take to reach that goal?
- What is the best savings plan?
2. Make a budget
To save you have to know exactly how much you earn and, of course, how much you spend per month. If you don’t have a clear idea of how you use your money, start listing all your expenses (from the smallest to the largest), as well as all your sources of income. Then classify the expenses into general needs and discretionary expenses.
In addition, this will also help you assess whether some of your discretionary spending is necessary. Many times one can find ways to save money simply by looking at what they are spending their money on. Even if some things cost little (like a cup of coffee from a fast food restaurant) you’ll find that if you’re a frequent gastronome, the soma adds up quickly.
It is very important that you be as accurate as possible when listing your expenses, since only then will you know how much money you can save and establish a good savings plan. To learn more about how to make a budget, we recommend that you read: Simple guide to make a budget .
What you should know: If you receive additional income, such as a special bonus, commission, or if you work extra hours per week, it is advisable to categorize that income as extra income. So you can convert the extra income into savings or funds to pay off debt.
3. Diversify your savings
This goes hand in hand with setting goals for your savings. Although it is important to take care of money, it is not just about saving to save. In addition to saving money to buy a plane flight or change your cell phone, you should consider an emergency fund and retirement savings, among others. Don’t make the mistake of raising money without taking future needs into account.
4. Choose the ideal savings instrument for you
Although keeping cash in a box or under the mattress is very practical, it is not the safest option or the most profitable in the long term. To keep your money safe and earn interest, you can opt for a savings account or a certificate of deposit .
If you have or will receive money that you won’t need to use on a daily or monthly basis, you may want to open a savings account. In this type of account, your money will earn interest instantly, at the rate set by the bank. The longer you can leave your money in the account, the more interest you’ll earn.
A certificate of deposit gives you a higher profit, but it has certain conditions, such as the obligation to keep your money in the bank for a certain period.
Investigate in different financial institutions the alternatives that best suit you.
5. Learn to buy
Another essential step to successful saving is knowing how to shop. What does this mean? Basically it is about being well informed of what your options are before comparing. When you have to buy something, research in different stores (and online) the price, the offers available and the conditions of purchase. Although it may seem like a small difference, it will help you save a lot of money in the long run.
When making a larger purchase, consider both cash and financing options. If you are buying in cash, it means that you are going to pay it off in full, you will be paying a fixed amount that represents its value. Of course, in order to achieve this, you must already have the total amount of the purchase to be able to do so.
If you decide to finance your purchase, in addition to paying the value of the item, you will also be paying an additional amount for the credit that was granted to finance it. This amount includes, for example, interest accrued throughout the payment term, as well as other financing management expenses. On the other hand, you must take into account how much you can pay as a down payment and the amount you would be paying month after month depending on the payment term (12 months or 24 months, for example).
6. Know the details of your contracts
This is especially important for people who have some type of loan or credit. If you usually use a departmental card or are paying in installments, read the terms of the contract carefully (preferably before you sign it). This way, you’ll know how much and when you have to pay to avoid late fees or penalties.
If the contract is in English, simply ask if there is a Spanish version or ask someone you trust to translate it for you. Remember that it is not recommended to sign a contract that you do not understand.
It is necessary to be aware of the payment dates and keep all the details of your contracts in your budget. Although the fines for late payments are small, if they are frequent they accumulate and can affect your savings plan.
7. Frequently review your progress
The budget is a very useful tool that will help you not only organize your money, but also allow you to see your progress. We recommend having your budget at hand and reviewing it at least once a week to prevent situations that could lead you to break your savings plan and measure progress towards your goals.
Remember that there are financial resources available to help. For example, with our PODERcard bank account you can take the stress out of managing your finances. This debit card offers a variety of benefits that will only get more useful to you over time, such as:
- Receive instant notifications about each transaction.
- Forget monthly maintenance fees.
- Make purchases over the Internet and online stores.
- Pay bills such as electricity, gas, water, etc.
- Transfer money to your contacts almost instantly.
- Get your salary up early.
- Lock and unlock your card from the app to protect it.
8. Be cautious
It is necessary to use money in an orderly and responsible manner, but that does not exempt anyone from suffering an unforeseen event. To prevent emergencies or any other incident from affecting the achievement of your goals, leave a margin in your savings plan. For example, in an annual savings scheme consider only 10 deposits (instead of the 12 corresponding to 12 months). In this way, if you have an unforeseen event or problem, you have two months to recover and continue with your savings plan.
9. Don’t lose hope
If, despite these tips, you are not able to save as planned or you feel that an unforeseen event constantly arises that impacts your savings, take a breather and don’t get discouraged. It is normal that from time to time situations arise that affect personal finances, but that is not a reason not to persevere with your savings plan.
In the event that you have repeatedly broken your savings scheme, we suggest you review your budget. Perhaps when designing it you did not consider all the items or you were simply too optimistic. So just adjust your budget and get on with your savings plans.
10. Invite your loved ones to save
Finally, we suggest you invite your family or friends to save. By sharing this goal with your loved ones, you will be instilling order in your personal finances and will also support both of you. Also, being surrounded by people who motivate you and know about your savings plan and goals will make things easier for you.
You, are you already saving your money? The faster you start your savings, the more benefits it will bring you. It doesn’t matter if you have $10 or $100. Remember that to start saving you don’t need a lot of money, but perseverance and order.