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We all have monthly expenses and bills that we have to pay, but it’s also important to try and fit savings into our personal monthly budget. Some people have enough disposable monthly income that they can afford to save on a regular basis. For others, forced savings is the only way to ensure that they continue saving on a regular basis.
Regardless of how much money you earn, and regardless of your personal monthly budget, there are several ways to ensure that everyone can afford to save on a regular basis. Even if you are currently repaying personal debts, student loans, or credit cards, you can use these five helpful tips to keep you on track so that you continue saving for your personal financial goals on a regular basis.
1. Budget in Your Savings. When you sit down to plan or revise your personal monthly budget it is a smart financial idea to add in regular savings as a monthly expense. This ensures that you continue to save money on a regular basis.
2. Save What You Can Afford. It’s important to realistically save only as much money as you can afford so that your money remains in your savings and investment accounts. If you under budget and try to invest too much money the odds are that you will probably end up making a withdrawal from your savings account, which completely defeats the purpose of saving. It’s a better idea to save a little bit of money at a time—letting it slowly build, rather than not saving at all.
3. Force Your Savings. The best (and most effective) way to save is to set up automatic transfers from your checking account to your savings account and various investment accounts. To keep up with your budgeting and savings goals, you can set up automatic transfers to coordinate with your pay period, whether it’s on a weekly, biweekly, or monthly basis. This way, when you wake up on the morning of payday your money has already been transferred to your savings account(s) and you won’t be tempted to spend the money.
4. Think Long Term. Building up your personal savings (like most personal goals) takes time. The key to successful savings is to think long term and stay focused on your goals. Most people don’t get rich over night—jackpot and lottery winners excluded, of course, so you have to keep in mind that even saving $50 per month can add up to a lot of money over time.
5. Know Your Savings Options. Traditional or high-yield savings accounts are great options if you’re looking to save cash for emergency funds or short-term goals. However, if you’re searching for more long-term investment options – to save for retirement, for example – you might consider investing in mutual funds, exchange traded funds, or even individual stocks. With these types of long-term investment options it’s best to consult with a financial planner or someone you trust that knows the ins and outs of each option so that you fully understand them before you decide on which savings plan is right for you.