How to Start a Savings Habit Today!
Saving money is considered by most to be the boring part of creating wealth.
But I can assure you without starting a savings habit it will be very difficult for you to achieve any sort of financial success!
Most people usually get paid, spend most or all of their pay and then try to save whatever is left over each week/month.
But usually there is nothing left to save and this is a process that is followed month after month.
I reckon there is a law of the universe that ensures if there is money in your account, it will get spent!
Your money won’t go on big things like holidays, big purchases or anything too exciting. But it will go! And it will go on small things.
You might be able to relate to this, and I can bet that a lot of those small things that your money goes on won’t add any value to your life.
We teach our members to save first and then spend.
It ensures that part of their pay is used to build wealth and move them towards their goals before they start spending.
This is not what most people do but is the only way to get ahead and build wealth.
Below are a few tips you can follow today to start a savings habit and get on the path to financial success:
Do a budget and determine your surplus
Work out what your monthly net income is (your income after tax) and then go through and make a list of all the things you spend your money on each month.
This list should include your fixed expenses so your housing costs, living costs, insurance premiums and car expenses. What you are trying to work out is what is left over each month after all your expenses have been paid (surplus = net income less fixed expenses).
Set a target and work out your goals
Work out what it is you want to save for and in what timeframe you want it and then work back from there.
For example, if you need $5,000 in 2 years for a holiday overseas you need to be saving approx. $208 per month ($5,000/24 months = $208/month).
What is it you are working towards? Are you saving to build an investment portfolio, go on a holiday or just aiming to build up a rainy day fund? It’s easier to stay committed when you have a goal you are working towards.
Set up a high-interest online savings account
This is an account that can be linked to your everyday bank account and provides a much higher interest rate than your everyday account.
Use a comparison website to find out what the best rate’s available are before committing to a bank. Give your savings account a name relating to your goal to constantly remind you what you are working towards.
Set up an automatic withdrawal each pay
This withdrawal should be based on how much you need to put towards your goal each pay cycle. You determined this in step two above. This money should come out straight out of your account after you get paid. It’s now the first thing you do with your money each pay cycle.
Get on with living
After one or two pay cycles you won’t even notice the money being put away anymore.
Most likely you spend whatever is in your everyday account each pay cycle and that doesn’t have to change. The only difference will be that there will be less in your account than there used to be. You’ve already put some of your money towards your goals before you start spending!
If you think what I have discussed today sounds simple, you’re right, it is!
But! I can tell you from experience that only a small amount of people actually do what they know they should.
If you follow the above steps and implement these habits into your life I can guarantee in 6 to 12 months time you won’t know yourself. Your savings accounts will have money in them and this will give you an amazing sense of achievement. Maybe you’ll even have ticked off one or more of your goals for the year.
If you can put this habit in place, it will set you up for financial success in the future. You don’t need a lot of money to start and you can get started with a very small amount. But if you do this and continue to do this over time you will be successful!
So get started today and start working towards your goals and building wealth for the future.
Article by Ryan Porter
Need some help with your goal setting? Our Financial Coaches LOVE helping members with their goals and working out how to attach money to them. If you want to chat goals with one of the WE team, book in a Free Strategy Session.
Disclaimer: Information contained within this article is of a general nature. Do not be rely upon it when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.