“Beware of little expenses, a small leak will sink a great ship.”
— Benjamin Franklin.
Building savings is often easier said than done. Even for someone with a consistent monthly income, it’s not always easily achievable.
Mostly, two behavioral things get in the way. First, you think with your steady income, you can always build up savings whenever you want, not factoring in emergencies or the fact that you may have to be without a job in the future. Secondly, not keeping a check on the unintentional buying habits that lead to many money sinkholes.
So, if you want to start saving up, the only way forward is to get serious and organized about it.
Why is it Important to set Saving Goals?
The COVID-19 pandemic has been a wake-up call for many who either lived from paycheck to paycheck or never felt insecure enough to think about savings seriously.
Both kinds have been jolted back to reality. Many have had to go through some radical lifestyle changes, but hopefully, they’ll now be better prepared for a life crisis.
This financial crunch brought about by lockdowns has made people rethink their priorities in life. They can now see the importance of savings for rainy days. They are realizing the burdens of mortgages and credit card fees, opting to better manage lives within their incomes.
On the upside, this is a healthy trend. It pays off well to set big and small saving goals and try and always pay with cash for everything — be it a holiday, a new car, or a property.
Having those savings in place gives you financial security, peace of mind, and better control in life. As unpredictable as life might be, you’re always on the winning side of a crisis when you’re prepared. And that’s a good place to be.
Having said that, if you’ve never been a saver or a consistent one, at least you may feel a bit shaky starting off. But don’t worry, we have a few pro tips for you to get started on your saving goals.
How to Start Saving Up for Your Goals?
Starting a savings fund is no rocket science, but it does require focus and consistency. Whenever you have a goal, you want to make steady progress in reaching your milestone. It is just like walking — just keep putting one foot before the other. However, you need to know where you’re going, or else you’ll never make it.
i) Give your Fund a Name
As insignificant as it may sound, it gives you focus and more purpose. It can be anything — a mobile phone fund, a wedding, or a retirement fund. Because when you know what you’re saving for, it gives you a number you need to reach.
Also, it stops you from using that money for something else. That’s why if you have multiple saving goals, it’s better to have a separate fund for each one. Depending on the matter of urgency, you can prioritize putting more or less money in different funds.
You may also have to put off saving for some funds that can wait. It’s all a game of setting your priorities right.
ii) Build Upon Your Savings
That just means don’t set intimidating goals from the set-off. That can seem to take forever and demotivate you along the way.
That’s why it’s recommended to set small initial saving targets that seem achievable within the next few weeks or months, like $500 or $1000. Once you have achieved small targets, you’ll have developed a habit of saving, and you’ll feel more confident and motivated to keep going. At that point, you can reassess your saving milestones.
iii) Allocate Weekly or Monthly Deposits for Each Fund
This is the stage where you dissect your income, assess your regular expenses, find unnecessary ones, and allocate amounts to different funds.
Once you have decided how much cash you need for your monthly expenses, the rest will be your savings. You can do this as simply as on a piece of paper. However, that makes it difficult to track your savings through the months.
To make things easier and efficient at the same time, you can use the Flamingo app to enter all your expenses and savings under various categories.
The app will also calculate how much amount you need to put in a fund every month to reach your target within a specific period. This is a good way of keeping everything organized and staying updated with your progress.
iv) Automate Your Savings
The next step is to automate your savings so that as soon as you receive the salary in your account, your allocated amounts get transferred to their funds right away.
This way, you won’t feel the brunt of taking out a big chunk of money every time you do it manually. This will also help you control the urge to get things on impulse as you’ll have only enough spendable income to last you an entire month.
What Not to Do When Trying to Save Money?
Once you are on your way, your funds will keep building up. But there are a few pitfalls that you must steer clear of.
- Don’t plan down to the last penny. Leave some wiggle room for unseen expenses.
- Don’t be tempted to take money out of your savings every time you feel the pull.
- Don’t be over-ambitious. Set realistic goals to not get worn out.
- Don’t hesitate to reevaluate your funds if circumstances change, for instance, as your family grows over time.
Wrapping Up
To sum up, there’s no science behind building your savings. You just need to be willing and consistent. Also, don’t deprive yourself of little pleasures every now and then. Just be mindful of what you spend and where you spend it.
Always think about if the cost of something matches its value and be intentional with your purchases. Be inspired by Benjamin Franklin’s quote that we mentioned above.
