Many people view saving money as a challenge. If you’re one of them, you’re not alone.
According to data reported by CNBC, the average American has $8,863 saved up in a bank or credit union, though that number can drop as low as $2,729 among young adults.
This can make it harder to make major purchases, such as buying a new car, putting a down payment on a house, or planning a wedding. It may take some time and dedication, but building your savings isn’t impossible.
Here are five tips to help you save for what you want:
Start by setting a specific goal. What are you trying to buy? How much will you need? For large purchases, you might even want to set smaller milestones along the way to keep yourself focused as you progress toward any larger goals. Apps can be particularly useful in this department, as they help you define your goal and visualize your progress along the way.
When payday hits, make your savings your first priority. For example, you can set up an automatic transfer that moves money from your checking account to your savings account every payday. This way, you’ll ensure you’re adding to your savings with every paycheck, not just saving whatever money is left over after covering your other bills. Using the right app is also helpful. Monorail app users, for example, can use the automatic transfer feature to split funds into multiple areas, allowing them to set aside money for emergencies or a specific purchase. The best part? Everything is automatic, so you can set it up and save money without even thinking about it.
Many people live by the 50/20/30 rule, which means they split their income as follows:
For example, if your take-home pay is $4,000, then you should be saving $800 per month. Even if you can’t quite meet the 20% goal, you’ll be surprised how quickly this can add up.
Not everyone can stick to a budget. According to data from the Pew Research Center, more than 1 in 3 families experienced volatility in their monthly income in 2015, making it harder to create and implement a budget. If this sounds familiar, try tracking your expenses for the month. How much are you spending on housing, clothes, food, and other purchases? Again, this is where tracking apps come in handy. They provide a visual representation of your spending habits, so you can see exactly where your money is going and make adjustments accordingly.
It can be painful to deny yourself those small luxuries, like gourmet coffee or takeout. But these “small” expenses can quickly snowball and sabotage your spending goals. If you have trouble cutting back on these little indulgences, limit yourself to only one coffee or meal out per week and, instead, prepare your own food and drinks at home. You may be surprised at how much you can save over time.
Saving money takes discipline and self-control, but the rewards are well worth it. So, define your financial goals, adopt the 50/20/30 rule, and otherwise be mindful of your spending. Bottom line: Make things easy. To that end, you can simplify your financial plan by using apps that make it easier to track your expenses, build your emergency fund, and help you achieve your financial dreams.