7 Steps to Start Saving

 

Saving can be a little intimidating when you don't know where to start. But remember, the biggest mistake you can make is not saving. Below are a few tips to help you get started with saving.

1. Track Your Expenses

The first step to start saving is to track your expenses. Figure out where your money is going, how much you are earning and spending, and how much you have left over. If you use a credit card, you can get a chart with your expenses broken down where you can see what you're spending your money on.

Once you figure out where all your money is going, categorize it so it's easier to see where you're spending most of your money. Use this to create a budget in step two. 

2. Create a Budget

Now that you have your categories, create a budget so you can minimize spending. Categories should include things like:

• rent / mortgage
• car payment / car maintenance
• bills
• doctors appointments
• clothes
• food  

Remember, your expenses should not be more than your earnings. If this is the case, consider cutting back your spending so you have money left over to save. 

3. Find Ways to Cut Spending

If you find yourself struggling to make ends meet even with a budget, consider cutting some nonessential spending. If you have any unused subscriptions, make sure you cancel them. If you eat out every night or spend too much on entertainment, consider taking a break until you can comfortably afford those expenses. You can also look for discounts and coupons instead of spending full price on items and experiences.

4. Set Savings Goals

Think of what you want to save for and stick to saving for that goal! Do you want a new car, new house, a vacation? Do you have any short or long term savings goals? Below are a couple of ideas for each of the goals: 

• Short Term Saving Goal - Emergency fund with up to 6 months of spending saved up for a vacation, down payment on a car, a home improvement emergency, or a natural disaster.
• Long Term Saving Goal - These include things like a down payment on a home, home remodeling, retirement, or college education.

5. Determine Financial Priorities

Similar to a savings goal, this is when you think of something you know you need to prioritize. Do you need to remodel your home or do you desperately need a new car? You can begin to save for these things now so you're ready to make the expenses later on.

6. Pick the Right Tools

Now that you have your goals and financial priorities in mind, it's time to pick an account where you want to store your savings. There are different options to choose from and some may be better for you depending on your goals and uses for the account. 

• For any short term goals, consider using a regular savings account or even a high yield savings account that gives you a greater yield than a regulars savings account. You can also consider opening a Certificate of Deposit to earn a higher dividend and increase your savings faster than a savings account. 
• For any long term goals, you may want to consider Individual Retirement Accounts (IRAs) or any stocks or bonds to help you save for retirement.

7. Make Saving Automatic

The last step to successfully start saving, is to make it automatic! You don't have to worry about forgetting to save when you set up automatic transfers every week, every two weeks, or every month. Remember, only save what you can so you don't come up short on other bills. The important thing is that you save, no matter how small you start. Slowly increase the amount you transfer and watch your savings grow!

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