6 July 2012

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Saving success: Advice anyone can follow to stick to their goals

In the past we’ve discussed ways to save money by spending less in order to get out of debt. Today I’ll be looking at ways to make your money grow when you’ve already conquered the debt mountain. It’s something to look forward to if you aren’t there yet. However, even if you still have debt, remember that you need to have an emergency fund and you should start contributing to that as soon as possible.

The first step to successful saving is setting saving goals. This article on How to Save Money sees anything from a house to a video game as short term goals because we can establish how much it is that we need to save or put towards down payments. Long term goals are those things that need more planning, like a retirement fund. You need to keep on top of this one to be sure you are saving enough to last you 20 to 30 years after you’ve retired!

With the retirement plan the time frame is easier to establish, although the amount you will be saving needs to increase as inflation increases to be sure that it doesn’t catch up with you. When you are saving for something, set a time-frame within which to achieve you goal. One car, saving for twenty months, one happy camper after twenty months!

 Be sure to set realistic goals that you can afford to stick to and reward yourself when you’ve succeeded. In this case the reward will be the car, but if you’re saving for something less exciting a reward is still in order. You need to feel like you’ve achieved something, because you have! And a reward will make you more motivated to save in the future. The reward can be something you’ve put off buying in your efforts to save. It’s always a good idea to wait before buying more expensive items as this will establish if you really need them.

The next part is less fun: keep track of every little expense you make for a month. Carry a notebook or download an app for your phone. Put the expenses into categories: food (but not treats like going to a restaurant), entertainment (include restaurant meals here), relaxation (something we often forget about, but it’s important for you overall health and sanity to relax), clothes, transport, fines, toiletries and so forth. Then look at how many of these items you can cut back on in the months to follow and basically trimming the unnecessary fat of your expenses. Set up a budget for each category and stick to it.

 Remember to go back to your saving goals often enough to see if they are realistic and if you are sticking to them. If your pay check minus your living expenses is still  less than what you intended to save per month after doing the debt diet described in the previous paragraph, you need to extend your goal and save for a longer time period or get a more realistic goal altogether. For instance: do you really need a brand new car with all the trimmings or will a small second hand model do the same job? It might even do a better job if you can find a second hand car with low fuel consumption.

In your efforts to save, don’t let credit cards hold you back! If you’re not religiously paying the full amount you spent back every month, they’re not worth the benefits as you will be making the credit card company rich instead of yourself!

Set up a savings account and put your savings as far away as possible so you’re not tempted to dig into them, they can accumulate interest and remember to set a debit order to pay your savings first thing every month.

If you’re saving over a long term, you can arrange that your employer pays the amount you want to save each month into that account so you never see it being transferred into your normal account and so it’s even easier to stick to saving. Just remember to keep track of the savings account in terms of how much you will have at the end of your savings’ time frame and if it will be enough.

I hope this gave you some valuable information on saving and planning for your future! Remember to reward yourself and to stay motivated. Debt free is great, saving is even better. You want that financial-stress-free feeling forever!

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