The importance of having a savings account cannot be over-emphasized. When money is tight, it can seem nearly impossible to set aside some cash each month. But to successfully manage your money and have any chance of reaching your financial goals, you must start saving.
If you are not in the habit of saving, it may seem like a daunting task. But like many new undertakings, sometimes the hardest part is simply to start. Even if you can only put away a small amount each month, it's a positive step you are taking. Go over your expenses and find places to make realistic cuts. Learn to differentiate between wants and needs. Try living with less. Once you start seeing your savings grow, it will help you realize what is important and what you can live without. Financial independence begins with saving.
Following are some things to do when just starting out:
- Write a check to yourself when you're paying your bills. Deposit the check into your savings, retirement, or investment account. Start with a realistic amount and then increase it as your expenses decrease or you have more income. Little changes in your spending habits can add up to big savings. Rent movies rather than going to the cinema. Check out books from your local library instead of purchasing them. Brew coffee at home and take it with you to avoid the high cost of those daily cappuccinos. Put the money you save into your savings account.
- Clean out your attic, garage, and closets and sell those items you no longer need or want. This can bring in extra cash. There are many online sites where you can post what you want to sell as well as the classified ads.
- Stay away from high cost cash advance loans. While they do offer immediate cash payment, the interest rates and fees for a two week loan can be astronomical. Try to find other sources of cash such as asking a friend or relative for a small loan, or taking a credit card advance.
Knowing how to manage your finances is a major factor in controlling debt and being able to attain your long-term financial goals. Without a detailed plan for spending and saving your money, it's easy to just drift along and leave your financial well-being to chance.
If you have never controlled your spending or been a saver, putting money aside in an emergency savings account may seem like an overwhelming proposition! However, the rewards of being financially secure and properly prepared for life's unexpected calamities are well worth it. While it may seem hard, the most important step is just to start.
Everyone dreams of having financial security and being debt-free. But the reality is most people find it extremely difficult to achieve real financial independence. But with a realistic savings plan in place, you can pay for the things you want in life without going into too much debt.
Any sound financial plan needs to include the regular habit of saving. While regular savings and money-market accounts are not known for earning high interest rates, they do offer various benefits that other types of savings options do not.
A great way to prepare for homeownership is by saving for a down payment. It may seem impossible right now, but with thoughtful money management, you could be on your way to your dream home.