Do you find it difficult to save money for emergencies or big purchases? If so, you’re not alone. A Federal Reserve Board study found that a shocking 47% of Americans don’t have the funds to cover a $400 emergency. This means a minor financial setback, like a car repair or a new appliance purchase, could send them into debt – and an even bigger emergency can spell financial disaster.
Start saving today! Here’s how to make it happen in five easy steps.
1.) Change your mindset
Most people look at saving as an extra burden. They figure they’ll start putting money away when they’ve got some to spare or “get around to it.” If this sounds like you, it’s time to rewire your brain. Learn to think of savings as another fixed expense, just like any other important bill. When working out your monthly budget, include a little bit for savings, too.
2.) Start using cash
Studies show that people spend less when they use cash. That’s because you don’t feel the dent in your wallet as much when it’s just a swipe between you and your purchase. Go cash-only for your discretionary spending, and hold onto more of your money. Don’t forget to put the money you haven’t spent directly into savings!
3.) Start small
Don’t think saving only matters when you are able to put away big bucks. Think a dollar a day, a fiver a week, or $50 a month. Every little bit counts. If you save just one dollar a day, at the end of three years, you’ll have an emergency stash topping $1,000!
4) Make it automatic
If you find it challenging to remember to put away money each month, set up a savings account with direct deposit at Wichita Falls Federal Credit Union. A predetermined amount of money will automatically transfer into this account each month – so you never feel the pain. As a plus, you’ll be earning dividends on your savings!
5.) Don’t spend it
Once you’ve got a comfortable cushion of savings, be careful to reserve it for actual emergencies. Ideally, you should have three months’ worth of living expenses in your fund.
Don’t be tempted to blow your savings on a spontaneous indulgence. Instead, save up separately for things like luxury purchases and dream vacations.
Your Turn: What’s your secret saving hack? Share your best tips with us in the comments!