Believe it or not, I’ve struggled in the past with saving money. I’m not talking about saving money on a good deal, I’m talking about regularly setting money aside.
Can you relate? If so, I’ve got some good news to share! By making some simple tweaks to the way we save, we’ve experienced more success in this area than ever before. Today I wanted to share some of what those tweaks are, because I believe saving money is an important step in breaking the cycle of debt and alleviating some of the stress you feel when it comes to money.
Tip #1: Focus on Small, Recurring Amounts
If you’re just starting out, it can be overwhelming to think about how much you’d like to eventually have in that savings account. It can be very tempting to put a large sum of money in savings to “get it going” only to have to dip into it a week later because you need groceries. (I know…I’ve been there, done that.)
Here’s what I’d like you to do instead: focus on putting small, recurring amounts of money into your savings account. If you’re really strapped for cash, this is going to be even more important. Worry more about creating the habit of setting money aside than the dollar amount.
A few years ago, I decided to start setting some money aside for my kids via Capital One Kids Savings Accounts. I think I started by just saving $10 per month, per kid. Over time, I’ve gradually upped this to $20 per month, per kid. I now have several hundred in each child’s savings account and am looking to siphon this money into college savings accounts. While this may not seem like much, in my opinion this is pretty stellar considering I grew it from just small increments of $10 – 20. Also consider that that’s more than doing nothing at all! Sometimes it’s just about baby steps and creating the framework.
Tip #2: Put Your Savings at Another Financial Institution
One of the biggest things that’s helped us save more money is by making sure it’s not too accessible. Having the bulk of our savings at our primary financial institution just never worked. It was too easy to transfer it over to our checking account!
While I do keep a small savings account at our primary financial institution for periodic bills, the bulk of our savings is at a secondary financial institution. We chose Capital One 360 because their accounts are easy to set up and manage online. Plus, they offer free checking and savings account options. Even better, Capital One 360 lets you transfer money from and to other financial institutions.
There have been a few occasions where we did need to access the money we’d set aside at Capital One 360. As the money takes a couple days to transfer, this really does make you consider how much of a need/emergency it really is. Emergency vet bill? Yes. Flash sale on designer jeans? Maybe not so much.
The result of this small tweak is that we’ve been able to set aside more money than we ever have at our primary financial institution. The difference has been truly remarkable!
Tip #3: Create Different Accounts, for Different Purposes
The more we’ve been able to save, the more I’ve seen the need to have different savings accounts. Most financial institutions (including Capital One 360), give you the ability to easily set up new savings accounts through online banking.
I like having various savings accounts, because it helps keep things “tidier.” Here are the current savings accounts we have going:
- Taxes. As we pay out taxes each year, it’s important that I’m regularly setting aside money for this purpose. Do you have a major, recurring payment to make that you could be setting money aside for?
- Emergency Savings. Dave Ramsey recommends having $1,000 to start. Our goal this year is to bring our account up to $2,000 (and long term, grow it into a 3-6 month emergency account). This money is truly for emergencies – unexpected vet bills, house repairs, car repairs, etc.
- Car Fund. We’ve decided to start saving up for a car. We currently do not have a car loan, but we have two used cars – one of which may only last another year or two. We’re trying to be forward thinking and avoid getting into debt.
- Kids’ Accounts. I’m really not sure what these are for yet – maybe college? Maybe a super cool graduation present? Whatever the purpose, I felt the need to start saving some money for my kids a few years ago and I’m glad I did. At the rate we’re saving, each child should have a few thousand set aside by the time they graduate. (Again, this is only from small, recurring amounts each month, nothing crazy.)
Of course, your personal savings needs could be different. You might not need an account for taxes, but maybe you’re trying to save up for an adoption. Or maybe a special vacation. Maybe you really need some new landscaping. I personally find it motivating to view several different accounts rather than just one big account.
Tip #4: Set Up Recurring, Automatic Transfers
One of the most effective tweaks we’ve made is to set up recurring, automatic transfers. We have these coincide with my husband’s paycheck to make it as painless as possible. As we have other financial goals we’re tackling too, the amounts we’re setting aside aren’t huge or earth shattering. However, the result of consistent saving should not be underestimated!
Even if you managed to save $50 a month, you’d have $600 in a year’s time. That is nothing to sneeze at!
If you’ve heard this tip before, but never taken the time to implement it – can I give you a gentle nudge? DO IT!
One of the most amazing things about having some savings in place is that it helps motivate you to want to save more money. I also find it motivates me to be more diligent with watching our other money, so we don’t negate our hard work.
So often, we fight against our bad habits or write a task like saving money off as “too hard.” As with my weight loss series, I think the key is to stop arm wrestling your bad habits. Short circuit them instead! Having small amounts of money come out and go to another bank removes my choice from the equation. Out of sight, out of mind.
If you’ve made saving money a goal for this year, I hope today’s post has brought you some encouragement, along with some practical tips. I’m not a financial expert or a super disciplined person, and I’ve definitely had my share of failures in this area. But I have found it’s possible to change your financial future, with a few tweaks.
Now it’s your turn: what are your best tips for growing your savings? If you were a spender, how did you become a saver? What other tweaks would you add to my list? Please share in the comments below!