Welcome back to Business & Budgets! Many people have saving goals that will align with their long term financial plan. With the ever-growing popularity of Dave Ramsey and The Total Money Makeover, many people set their first savings goal at $1000. While I do believe $1000 is a great start to any emergency fund, I do believe $500 would make more sense for college students and $5000 would be more aligned for a family of four with a high income. It doesn't matter how much you save, as long as you save something! In this post I will be giving you a few tips on how to save your first $1000 because we all know how difficult it can be to not touch the emergency fund.
1. MAKE ADJUSTMENTS
The first thing you want to do is review your current budget and figure out where you can make adjustments. Start with your expenses first, what could you cut back on or completely cut out? This consists of gym memberships that you don't use, TV subscriptions that you don't watch (or maybe watch too much), monthly App fees, etc. One line item on your budget typically has a huge margin for change and that's your food expenses. I have been able to cut my grocery bill nearly in half based on my shopping and planning tactics that are listed in my book, click here for a free preview. If you are looking for other ways to save on major expenses be sure to check out my three part series on how to cut the big expenses, I cover Childcare, Transportation and Housing. Make sure you are always paying your bills on time because late fees can quickly add up and become an expense of their own. If you need to move some bills around to better align with your payday schedule, call those companies up and change the due date.
After you make adjustments to your expenses, review where and how you can adjust your income. Of course when it comes to income you want to adjust the opposite way, you want to increase this category. There are a few ways you can do this. If you have a job and would like to stay there and climb up the ladder, look for opportunities that come with a pay increase. You can applying for a new position, taking on a new project or just straight up asking for a raise at your next evaluation. No matter the tactic you take, make sure you do something and don't just remain a sitting duck at your job. My favorite tactic has always been to work hard and be rewarded for it. Either by getting a raise because my employer noticed my performance or by asking for one directly at bi-annual evaluations. I have always increased my wages by $3-$5 per hour at every job I've ever held.
Another way to increase income is to add a new stream or two of income. Whether that means you start a business, drive Lyft, babysit a few neighborhood kids after school, start a Youtube, your options are endless. Choose one thing, get good at it, make sure the flow is consistent, then add another stream of income. The average millionaire has seven streams of income.
2. MAKE SACRIFICES
Pull your list of expenses and bills back out. What can you live without? Be honest with yourself. You don't NEED to binge watch those dramatic shows, nor do you need a $200 Starbucks budget. If you want to reach your financial goals it is going to take a ton of dedication and it starts with this list in front of you. Honestly many people can cut $100 out of their monthly budget but they refuse to because they want acrylic nails and frappes instead. If you don't take your goals and your budget seriously, your investment portfolio will continue to be a joke. So review that list and make some cuts, start slow if you need to like replacing your $60 cable bill with a $6 Hulu account.
3. MAKE A PLAN OF ACTION & SET A DEADLINE
A goal is cool, but it's unlikely to happen without a plan of action. Now is the time to start developing that plan! First, you need to start with your big goals. Do you want to by a house? Save for retirement or college? Payoff your debt? Regardless of what your goal is, you can make it happen with some planning. Once you determine what your goals are, break those goals down into smaller, actionable, execution based tasks. These small tasks will be the rungs on your ladder to your goal. Give all of these tasks deadlines, realistic deadlines! Don't stress yourself trying to do it all too fast. Create a plan that works and makes sense. What has to be done first? How much time will each task take? Make yourself a visual to keep up with your progress, a notebook, a chart or anything else that makes sense to you.
4. CHOSE A SAVING STYLE THAT WORKS
The easiest way to reach your savings goal is to leave the money left untouched, it should be added to and left to grow interest. Everybody can't save money the same way. While some people are great at stacking cash, others operate better with their money in a savings account. If you don't trust yourself at all with your spending problem, bring a trusted family member or friend into the situation. Ask this individual to hold your cash or your card, set hard rules on when funds can be released to you. Do what works best for you based on your natural money behaviors.
5. DON'T DIP FOR BULLSHIT
Do not make excuses to touch your savings! This money is to be used for emergencies and once emergencies only. Going out to eat tonight because you don't feel like cooking is not an emergency. If you always make excuses to dip into your savings, it will never grow. Most importantly it won't be there when you need it most, like when you need to replace your car battery and you now have to go borrow $200. Treat your savings like spent money that no longer exists to you. Also, don't haphazardly spend your money because you will always end up in an emergency. For example, you randomly buy a pair of $250 shoes, but you needed that money for groceries. You now dip into your savings and pull out $250 so that you can eat. You essentially bought those shoes out of your savings. Don't touch the money, no matter what, by using the saving style that works best for your moments of impulsive spending.
I hope these tips have been useful to you and will assist you on your savings journey. Once you reach your initial goal of $1,000, continue to use these tactics to reach your next goal. Whether you want six months of expenses saved or $25,000 for your first house, you can do it. I have two take aways for you as you continue on your financial journey.
1. Stay focused on the goal and don't get distracted by temporary satisfactions.
2. Start investing! Building your investment portfolio early pays off big in the end.
3. Join the Manifest Your Success Challenge! Launching Sept 23rd, click here to sign up!
Make sure to like, share and subscribe! Happy saving!