Here are Some Golden Rules for Improving your Savings Strategy

Posted in Save Money on April 27, 2020

Did you know that only around 53% of Americans say that they would be able to cope if they were hit by an emergency that cost them a few hundred dollars to fix? Most of us know how important it is to have an emergency fund as a back-up when we’re hit by unexpected events like broken appliances or car issues. However, actually finding the extra money for that safety net is easier said than done.

However, sometimes, the problem isn’t that you can’t save any extra money, it’s that you’re not using the right strategy to achieve your goals. If you’ve been struggling to take your savings to the next level recently, and you want to try some new ways of making a change, start with the following golden rules.

1. Pay Yourself First

One of the most important rules you’ll see in any budgeting guide is that you need to pay yourself first. This sounds like a strange saying if you haven’t heard it before, but what it basically means is that you take the money you earn from your job, and you put it into something that’s going to help you in the long-term. Rather than spending money on things like nights out with friends every time you get your wages, set up an automated plan that pays into your savings.

Most of us have direct debit payments going out to various companies for things like electricity, broadband and insurance fees these days. So, why not set up the same solution for your savings account? Open a separate account for savings where you can start sending a portion of your money each month. You can arrange for the payment to go out of your account automatically when you get paid, so you’re less likely to forget about it.

Once you’ve paid into your savings, you can see how much money you really have leftover for luxuries and entertainment.

2. Have a Plan, but Be Flexible

It’s easier to accomplish your goals when you have a strategy in mind. The good news is that there are a lot of different strategies available for people who want to improve their cash flow and their budget. For instance, you could consider the 50/30/20 plan. This is a strategy that involves paying 50% of your earnings into your bills, another 30% into your savings, and 20% into your lifestyle expenses. The 30% and 20% parts of the plan are reversible if you prefer to go the other way.

Having a plan like this can help you to divide your money more evenly each month. You can also combine those plans with other things, like deciding that you’re only going to buy the things that you use your lifestyle cash on with real money, so you don’t accidentally overspend on a credit or debit card.

While rules and guidelines are helpful, however, it’s important to remember that life can change, and that you might decide to change your plan from time to time. For instance, if an opportunity that comes along that requires you to apply for a loan for a new car, that might not fit with your strategy. However, if that new car could help you to earn more money in the long-term, and accomplish your goals faster, it might be worth changing your strategy just enough to allow for it.

3. Get the Right Help

Budgeting and managing your finances can be a tough job. Nobody ever said that you had to tackle this challenge alone. There are plenty of sources of help out there, from articles about budgeting like this one, to apps that monitor your spending and offer advice on how to cut down costs in various areas of your life. You can even get your bank to send you regular updates on your balance to your phone, so you don’t lose track of how much money you have.

Getting the right help could also mean reaching out to friends and family members when you need some extra support. Family members can offer their own advice on how you can save more effectively, while friends that know your situation can try to be more mindful of it. For instance, they might ask you to come over for a coffee rather than inviting you for a night on the town if they know that you don’t have a lot of money to spend.
The more support you have, the easier it will be to nail your new budgeting plan.