Savings is a golden word where everyone wants to do but very few actually does it well. So why this is so hard? Will find the reasons for this and let’s discuss how to start it.
Records reflect that American’s aren’t good savers. Nearly 46% of American’s can’t afford to pay a $400 expense without going for any borrowings. Also another 21% cannot survive a three month unemployment without going into debt such as borrowing from friends, selling your assets such as your household, your car or even your watch or they might end up getting short term quick loans.
At Wealth Saving Expert, we understand having a savings fund is extremely useful as it will be useful for you at times where you need it the most. This is the foundation for the financial security which will bring you mental happiness. Also savings will help you not to touch your retirement funds or other investments under financial unstable circumstances while it will support you and your family to continue the normal lifestyle which was experiencing. This is a huge sense of confidence for you when facing these challenges boldly without creating any frustrations which could easily lead you to lose focus of coming out the short term challenges probably because of loss of employment, sudden economic conditions such as current Covid-19 pandemic which had led to pay cuts because of loss of revenue or any other financial obstacle and to maintain your focus to come out of these obstacles.
Even we said like this, still savings is a hard obligations. Every day you are bombarded to numerous social conditions such as social media, TV and Radio advertising, online deals and friends who will push you to spend and spend and own the things where society wants to push toward you. You need to decide what actually requires you and think of the goal of savings focusing on your future.
Savings goals become every New Year’s personal resolutions and goals. People set new objectives save more each year but it is not easy at to execute and maintain.
Let’s see how to start this. First need to see why it is hard.
Why it is extremely difficult to start saving
When you first start saving, you feel it is very small and the amount reflects as negligible. This creates negative vibes in your mind and feels this is a senseless exercise and can’t reach your goals. Your dreams can be far away from reaching but you need to start small.
When you decide to save without spending everything, you start accepting newer challenges and giving up somethings you normally would have done. Your $100 monthly saving amount will seems like very trivial when you hit an expense like $ 1,000; also suddenly this savings will not take you to afford an expensive holiday in Europe and buying your dream car. Also you would not get the pair of shades, music system or the car stereo which would have spent your $100 on.
If you continue with the non-saving mindset, soon you will realize that you have reached your retirement age and you are left with nothing. Remember time passes very fast and it is very easy for you to fall into this trap.
Well you don’t have to end up in a very sorrowful condition. You can start this with some few tactics and a focused mindset and start building your cash reserves to face any obstacle in your life.
- Keep your savings away from your attention
Getting your salary transferred and planning your savings account in the same bank is not advisable at all. This creates a natural tendency to get money transferred back to your salary account and use if you are going to be out of cash.
This creates challenges for you to be disciple in developing a savings initiative.
Set up a separate savings account probably in a separate bank with a high yield where each month you can set a an automated advise to your salary bank to get a percentage (Ideally 20 or more) to transfer on the Salary day itself. This creates your expenses to suite to the balance which is there in your salary account and to plan the expenses accordingly. This doesn’t mean you have to suffer and live a miserable life but it is all about setting your mindset.
Also a high yield savings account will bring you additional interest income although it is likely to be around 1%. But still it is some extra money gaining to your account.
- Focus on the progressive journey rather than the final accomplishment
In most blogs and financial experts would say to concentrate on the end objective. But it is not always the case. Focusing on end objective is important for short term goals such as planning your next vacation in sandy beaches, buying your latest Iphone. Visualizing these objectives is conducive for you to save money towards thinking the end objective.
But it might work differently when you start saving with such a mindset for an extremely saving goals like, Your Emergency Savings Fund. This is a long journey and you are the main player in this journey. First set for three month plan and start saving. Start is the hardest and you will find it very challenging. After the third month review yourself. Try to keep the higher savings standards to continue. All of a sudden you will find savings is part of your life which cannot be separated.
- Don’t plan to fail
Setting up too steep and daunting limits will demoralize you in your journey of accomplishing and objective. Think that you want to lose 40 pounds this year. So you will need to put extreme pressure and strain on you by doing excessive excursing and you need to totally revamp your food hobbit. This is too painful.
Best would be have scattered goals. You can start workouts 30 minutes a day, reduce your carbohydrate intake, drink more water and you will feel gradually you in a mission and start losing weight steadily. Sometimes external factors are not only the factors result in weight gain. Your genetics will also contribute which is beyond your control. Importantly you need to control factors which you can. And this will bring mental and physical satisfaction.
For saving money also same applies. Don’t set daunting targets like saving $ 20,000 next year which brings you frustration and could jeopardize your concentration and focus. Start with a percentage of amount from each pay check to save. With time you will realize that your savings fund is increasing and importantly you will have self-satisfaction.
- Use your bonuses wisely
Say you received year-end bonuses, unexpected a huge sum of tax refunds or some money from your parents, of course first instinct is to plan some expenses to spend that money. It is always important to buy things you like in your young ages. You don’t have to save all the money you got as an unplanned income to you but you can spend 30% of that money and balance 70% you can save in the High yield Savings account.
This way you are increasing your savings other than the money you are saving from your pay check. All these moneys accumulating for your final wealth goals effectively.
- Consider a side hustle
Yes this is a very important initiative at current context. With economic uncertainties, quit a lot of individuals are focus on evaluating different side hustles which will help to secure their financial uncertainties and to bring more wealth to their savings.
You can run your monthly expenses from the income you are getting from the regular pay check while you can start saving the income you gain from your side hustle. When you select your passionate areas to engage as your side hustle, of course you can bring some self-enjoyment while making additional income.
A quick look back
What is important is, you need to start the savings habit somewhere and keep progressing. It can be from your monthly paycheck, or from side hustle or saving from additional income you get from unplanned income, you tend to get close to your final targets of your wealth goals.
Make savings a habit. Then it will not easy to come out of it!
