Next to health and fitness, personal finance goals are some of the most common New Year’s resolutions. Many people start a new year with a resolve to “save more money.” However, like most resolutions, the goal to save more money often gets put off until it is forgotten altogether. There are, however, several simple ways to save a fairly large amount of money over the course of a year. Here is a basic personal finance road-map for setting back $2,000 over the course of a year. If this goal seems unrealistic for you based on your income, play with the numbers to find a realistic personal goal. The principles will apply regardless of what dollar amount you plan to save.
As with any goal, the first step to save more money is to clearly define what you want to accomplish and then break it down into smaller steps. The examples here will use $2,000 over the course of a year as the goal, but set your own goal, according to your means. Take your total goal and divide it by 365 in order to calculate how much you will need to set back each day on average. For $2,000, this number comes out to $5.48. Seeing the larger number broken down into a simpler daily goal will help to keep you motivated and give you something actionable that you can do each and every day.
Once you know what you need to save each day, you can decide how to do it. You may simply have that much or more leftover after your earnings and expenses on a daily basis. If this is the case, the matter of saving your daily amount becomes very simple. If you do not, you will have to find small ways to save more money by reducing your expenses. Simple ways to do this include buying generic products instead of name brands or maybe skipping out on small expenses, such as coffee drinks, altogether. Whatever you decide to do in order to reach your daily savings goal, be sure to stick to it throughout the entire year.
One of the best ways to ensure you don’t spend the money you’ve saved is to keep it in a separate account from your usual working bank account. Establish a savings account, as this will make your money less immediately accessible for spending. While you’re at it, figure out what your deposit schedule will be. Obviously, depositing $5.48 every single day for a year will quickly become tedious and inconvenient. Instead, make a cumulative deposit every two weeks, every month, or a schedule that works well for you. Be sure to take into account what time of the month your bills come due, as this might be a time you will want to avoid scheduling your savings deposits. On the flip side, you may decide to treat your savings deposits like a bill and make those transfers on the same type of monthly or weekly schedule. Find what works for you and stick with it!
A few times during the year, you may find yourself in possession of some additional disposable income that you do not already have a plan for. Rather than looking for something to spend that extra money on, save more money by depositing some or all of it into your savings account. If you do this even a few times throughout the year, you’ll see by the end of the year that you may have surpassed your original goal.
Though the results may seem small at first, after a couple of months you’ll begin to see an appreciable amount building up in your savings account. Be sure to look in on that account once in a while to provide yourself with added motivation to continue your savings. For many successful savers, seeing larger and larger amounts in the savings account becomes almost like an enjoyable game.
By following these very simple steps, most people will be able to create a savings of $2,000 or even more. Even if your income does not make this amount realistically possible, set a goal and try to set aside a small amount each day. If you manage to save even a few hundred dollars over the course of a year, you will have developed valuable saving habits that will serve you well throughout the rest of your life.
The CESI Team is committed to helping you reach your financial goals. If debt keeps you from living the life you dream of, contact us for a free debt analysis today and get started on the road to a brighter future!
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