One important factor of being able to manage your finances is being able to save consistently. This will help with meeting your goals and avoid falling into debt. In this blog, I will be writing about 5 habits that will help you to save consistently.
- Set clear measurable savings goals.
Setting specific goals will help you to measure your progress and understand if the plan you have in place is working or not. The first step of setting effective goals is understanding your values. It is important to set goals that are linked to your personal values because this can motivate you to work towards your goal. This is because we naturally gravitate more towards things we value. If for example, you value, freedom and independence, this could be linked to a goal for clearing your debt and increasing savings or creating multiple sources of income. Having specific goals means identifying exactly what you want to achieve. For example, if you want to save more in 2021, you could change it to saving a specific amount in 2021. This enables you to measure your progress as assess what worked and what didn’t.
- Prepare a budget and plan your cashflows in advance.
Having a budget in place will help you to review how much money you are spending and if the goals you are setting are achievable. Once you have set your goals, it is important to look at what you can afford or the time it will take to reach your goals. By using your budget, you can calculate how long it will take to achieve your goals and reduce expenses in order to increase savings. Reviewing and tweaking your budget is an ongoing process that will help you to stay focused on your goals and identify areas where you can make more savings.
- Automate your savings
Automating your savings means automatically moving money to your savings account at a set date during the month. In the UK, you can do this by setting up a standing order which automatically moves money from your current account to savings account. This is an easy and efficient way to ensure you do not forget to save and if set up early enough during the month, you avoid accidentally spending the money
- Utilise the correct bank account for what you are saving for
It’s important to understand how long you intend to save for because you can then utilise savings accounts that offer a higher return. For example, fixed-term savings accounts or notice accounts offer higher interest rates as compared to regular savings accounts however, you can’t withdraw your money during a certain period of time. If you know how much you want to save for over 5 years, you can invest the money and take advantage of the compound interest. This is when you reinvest the returns received on the amount you invested.
- Look at the bigger picture
“A journey of a thousand miles begins with one step”
Sometimes when saving a small amount of money, it may seem like nothing is happening or it’s not making a difference. It’s important to keep in mind the bigger picture, every amount being saved is bringing you closer to your goals. To keep focused on the end goal, you can write down your goals and had small milestones or use a vision board. Remember to acknowledge and celebrate the small wins as they will keep you motivated to continue
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