The act of saving money regularly can be difficult to turn into a habit, even though it is very important to your future financial security. There are so many products and services being advertised as necessary for the improvement of your life that it is very easy to spend every dollar you have and still not be satisfied. Fortunately, there is a saving method that you can use that ensures that you will save regularly and meet your savings goals. Here are the steps you can take to use this saving method effectively.
Establish An Affordable Amount For Regular Saving
The first step in reaching your saving goals is establishing an affordable amount that you can save from your paycheck each pay. This will be your baseline saving amount to get you started on your way to being a regular saver. It is recommended that you try to save at least 10 percent of your earnings, but if your budget is tight, start by saving $50 per pay. Over time, this small amount will snowball into a considerable sum that can be used for unexpected expenses and future needs. If you can, automate your saving and have the amount direct-deposited into your savings account each week.
Pledge To Save Half Of Any Lump Sum Payment
Once you have established your base saving amount, pledge to save at least half of any additional money you receive in the future. For example, if you receive a holiday bonus, an income tax refund, or other lump sum payment, put at least half of the amount into your savings account before you begin spending the rest. This allows you to increase the amount of your savings by a significant amount each time while still having part of the money available for your immediate needs.
Increase Base Amount When You Receive Salary Increases
In the future, you should increase the base amount you are saving from your salary every time you receive a salary increase. These increases usually come in the form of a pay raise or an adjustment from moving from one employment position to another one. If you are having a percentage of your income direct-deposited into your savings account, this adjustment is already being made for you. If you are transferring the money into your savings account yourself, you will need to calculate how much money the increase is adding to each check and then take half of that amount to add to your base amount each pay period. If you follow these three steps, you will find yourself saving a significant amount towards your saving goals without sacrificing your current quality of life.