If you haven’t made a habit of saving money to reach your financial goals, the process of saving can seem overwhelming. Successful saving is a goals-oriented process that requires a plan for steady contributions over time.
Eager to save but not sure how to start? All you need is a savings account and a goal. Here are four ideas to help get you started!
1. Start filling up that emergency fund.
If you don’t have savings of any kind, an emergency fund is a smart place to start. An emergency fund is extra money that you have set aside in a savings account specifically for unforeseen expenses, such as a car repair, a trip to the doctor, or a gap between paychecks.
Whatever the expense, even having a few hundred dollars set aside for emergencies can make a huge difference. A great goal is to work toward building up your emergency fund so that it could cover 4-6 months of your living costs.
That number may seem out of reach at first, but it is doable if you start small and grow your fund over time—even if it’s only a few dollars at a time.
2. Make retirement contributions, no matter how small.
If you’re ready to start saving for retirement, there’s no time like the present. Because retirement savings earn interest that compounds over time, saving early is one of the smartest financial moves you can make.
Get started with retirement savings by finding out if your employer offers a 401(k) or other retirement savings plan. Also find out if they offer any matching benefits. Many companies will match contributions up to a certain percentage of your income, which means you essentially get free money in exchange for your savings efforts.
With those kinds of incentives, it is worth doing everything you can to make regular retirement contributions and to save as much as possible now to build your long-term gains. If you’re really struggling to save for retirement, you might benefit from sitting down to discuss your money management with a financial advisor.
3. Create a savings fund for your next big purchase.
Whether you’re looking to pay for a house, a car, a wedding, or even new furniture, those big-ticket items often require saving over time. Figure out the total amount you will need, then make a schedule to determine how much you can save every month and how long it will take you to reach your savings goal if you stay on track.
Saving is always a better option for financing big purchases than taking out more debt, if you can avoid it. Houses and cars often require some form of financing, but diligent savings can help you reduce the amount you take out on a loan and might even help you earn a lower interest rate.
If you can get in the practice of saving up for big expenses ahead of time, it will help minimize the debt you carry and reduce the interest you have to pay over time—which can give you additional money to tuck away in savings.
4. Set up automatic contributions to hold yourself accountable.
This technically isn’t a savings goal, but it is a wise move to make today to improve your savings success in the future. If you’re someone who struggles to put money into savings on a regular basis, you can keep yourself committed to your savings plan by setting up automatic contributions to a savings account.
Setting up these contributions not only guarantees your contributions to whatever savings goals you’re pursuing but also helps you get in the practice of saving on a regular basis, which will make it easier to set and reach other savings goals in the future.
These are just a few ideas for savings goals you can set for yourself and start building toward. If you’re eager to jump-start your financial future, don’t wait another day!