You know you need to save more money, but it seems impossible. Maybe you're barely paying your bills and it doesn't look like your income -- thanks to the sluggish economy -- is set to grow anytime soon.
Saving money, though, should be a priority. If you do not have any savings, how will you handle losing your job or suffering a costly injury? The odds are, you'll run up loads of debt to cover these financial emergencies.
The good news is that saving money is not as difficult as you might think. You can save, at least a little, even if you feel that you have few dollars to spare.
Your first step is to draft a budget. You cannot save money if you do not know exactly how much money you have coming in and how much is going out each month.
At the beginning of every month, estimate the amount of money that will flow into your household. Then subtract your monthly expenses from this figure. Don't forget to be realistic. Budget enough for groceries and entertainment. If you create a budget that's not realistic, you'll have little chance of following it.
At the same time, you need to be spending less than you are taking in. So, if you have to, that means cutting back on things that shouldn’t be a priority over saving money.
Once you know the difference between your income and your expenses, you'll know how much money is available for saving.
Force Yourself to Save
You might get discouraged when you see the results of your budget, especially if you only have a small amount of money left over once you calculate your expenses. Here's a simple truth, though: What's important is that you start saving something, not how much you are actually saving.
Thanks to compounding, depositing money in an interest-bearing savings account will help your money grow faster. This is a strong case for making regular deposits in your savings account, even if these investments are small ones. So, if at the end of the month you'll only have $50 for your savings account, don't get discouraged. Instead, deposit that money.
Your Savings Account
It is important to select the right savings account. You'll want an account that pays interest. Your money will not grow as quickly in a savings account as it might in a riskier investment vehicle. However, remember: Your money will remain in your savings account for the long haul. It will grow steadily over time, not necessarily quickly.
Secondly, be wary of accounts that require minimum balances. If you do not have a lot to invest early, you'll need to make sure that you will not face any fines for not having enough dollars in your savings account.
If your employer offers direct deposit, it makes sense to ask to have some of your money from your paychecks automatically deposited not only in your checking account, but also in your savings account. This way, your savings account will grow without you having to think much about it. Just make sure that the amount you are automatically depositing is not more than you can afford. You need to be able to pay your bills as well as save your dollars.