It’s always a smart idea to set realistic financial goals and grow your savings account over time, regardless of your income. The good news is that you don’t need to be a personal finance expert to get on the right track and begin saving some money. Start with these five simple goals and you’ll be well on your way.
Develop a Clear Budget Plan
Although it might seem a little tedious, it’s essential that you create a detailed budget plan if you want to take control of your savings. One of the easiest ways to do this is to follow the 50/20/30 rule. Basically, your monthly budget is divided as follows: 50% for the essentials, 20% set aside for savings, and 30% for variable activities and non-essential occasional spending.
Do Your Best to Get Rid of Debt
If you’re in some form of debt, you’re not alone. Many Americans have either credit card debt, college loans or other overdue payments that are slowly accruing more and more interest. Make sure to pay off your loans as quickly as you can. If you decide to follow the 50/20/30 rule mentioned above, it’s best to allocate all or half of the 20% designated for savings to pay off your debt instead. You’ll save more money in the long run.
Limit Unnecessary Day-to-Day Spending
Even if you’re not in debt and have a little more flexibility with your funds, it’s a good idea to take your daily spending into account and see if there are payments that you could live without. It can be helpful to sit down with your family or spouse and have everyone write out a list of their usual casual expenses. You might discover areas you didn’t realize you were overspending on, and that you don’t mind cutting back on.
For instance, if you always buy a monthly train or bus pass, but notice you end up using a car service much more often, you might forego the bus pass altogether and just buy the occasional ticket when needed. Or, you can opt to bring a refillable water bottle to work instead of always grabbing a drink with your lunch. With a little clarity and reflection, a lot of habitual spending habits can be transformed into useful savings habits instead.
Start Earning from New Income Streams
Over the past decade, full-time freelancers have become a lot more common. But you don’t have to quit your day job to start earning extra money. There are plenty of options out there for anyone with a little bit of time and talent. Instead of kicking back and watching cable or a streaming service after work, try to set aside an hour a day to work on your side project. If you have skills in writing, coding, accounting or design, there are many websites that can help you find gigs. Even if you have more niche skills, with much of the global economy online, you’re likely to find a few clients.
Better yet, investigate how you can develop a revenue source that keeps providing income even after you’ve stopped putting time into it. Passive income is a hot topic right now, but it’s more than just a trend. Developing an online course, licensing your creative work like photography or design, or renting equipment are all examples of easy ways to make some extra money while you sleep.
Save on Monthly Payments and Utilities
Some of your primary monthly expenses, like your phone bill and electric bill, can take up a big portion of your budget. Evaluate your monthly usage of these items and see if there’s any opportunity for cutting costs. There are a lot of simple workarounds that can potentially add up.
For example, upgrade to more energy-efficient appliances or use a fan over A/C for milder summer days. You can also review your cable bill and see if you really need that deluxe channel plan if you’re only watching a handful of shows. Finally, you can improve your savings by keeping on top of car maintenance; choose a regular checkup over a costly mechanical breakdown in the future.
Even just a small effort applied to each of these goals can have a big impact on your wallet.
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One Thought on “Five Financial Goals to Boost Your Savings”
I’m not sure this expense breakdown is realistic for those who live in Eastern Massachusetts, where housing alone can eat up 50% of a budget, not to mention medical costs. 30% for discretionary spending sounds like a luxury!