When you’re focusing on paying down debt, setting aside money in a savings account each month may seem like a daunting task. Don’t let your savings goals suffer while you’re accomplishing other tasks on your financial checklist.
In addition to building an emergency reserve, you should always add to savings. We know what you’re thinking: How do I pay down debt, prepare for emergencies and find balance, all at the same time? It’s possible when you follow these tips:
Make Good Choices
This may sound simple, but take time to think about the spending choices that actually impact your savings goals. If you find that you spend more money when you carry your debit card, leave it at home and use cash. If you’re out of touch with your bank account balance, download your financial institution’s mobile app and track spending daily. Know yourself and make choices that will push you to establish disciplined financial behaviors.
Use the right budget system
In order to stick to your spending plan (so that you can stick to your savings plan) you need the right support. Use a system to separate your spending into buckets like needs, wants, savings and giving. You could also consider changing your direct deposit options with your employer so that a certain percentage of your income goes straight to savings.
Make a few short-term sacrifices
You’ve already implemented new spending habits to help free up cash to pay down debt. But there’s more you can do; it’s just going to take a little short term sacrifice. Look at the items in your “wants” list of spending. Cable, lunch money and other small “luxuries” probably fill that bucket. Set aside time to call your cable company and ask for a smaller package. Bring your lunch to work. Make small adjustments and commit to those changes for a set timeframe. In the short-term, put the cash that you would spend on cable, for example, straight into your savings account.
It might sound elementary, but you can make a dent in your savings numbers by saving spare change. Try to round up your transactions. Use cash on daily purchases and put the change you get back into a separate part of your wallet or plastic bag. If your soda cost $1.79, pretend it was $2 and save the extra 21 cents. Deposit that change into your savings account every week or month — whatever works for you. If you don’t carry cash, don’t worry, there’s an app called Acorns that will round up for you automatically.
Review all savings options
Remember, a traditional savings account isn’t the only way to save. Review your employer’s 401(k) policy, read up on the pros and cons of a Health Savings Account and get familiar with money markets and certificates. Each one serves its own unique purpose in your complete financial picture.