The path for achieving financial goals often comes down to one thing: the ability to save money. Whether we’re planning to pay down debt, buy a new bike or take a trip this year, you’ll need to save money in order to accomplish those goals. Here are a few strategies to help you stay on top of your savings goals this year.
Know your total monthly income
Start with your total monthly income, after taxes and other deductions. If you have a job where you receive tips or commission and your paychecks differ each month, base your budget income on your lowest paycheck or worst-case scenario. If you are living off your savings, give yourself a monthly allowance based on your expenses.
List your expenses
Make a list of all your expenses—rent, utilities, phone bill, food, personal care items, money to go out with friends, etc. Categorize your spending and include the amount you need each month to cover all of your expenses.
Build savings into your budget
If you can, make sure you are saving an amount of your paycheck each month in a separate account. Your savings will help if there’s an emergency or an extra expense, such as textbooks for next semester. If you have variable income and receive more tips or commission than usual, save for future months when you might be stretched thin.
Determine how you will track spending
Find a way to track your spending that works best for you—this can be done using a spreadsheet, notebook/budget journal or financial app.
- Mint links to your accounts and helps users establish a budget, track spending and pay bills on time. This free app can be convenient and useful for first-time budgeters who are getting into the habit of saving money.
- Qapital is an app that connects saving money to real-life experiences. After inputting your savings goal, choose one or two ‘rules’ that determine how to save money. For example, you could set a rule to round up your purchases to the nearest dollar with the difference. The change from rounding up your purchase gets transferred to a savings account. For those looking to change other habits, there are additional rule options like saving a specified amount of money every time you visit the gym, or the ‘guilty pleasure rule’ to save money when visiting places like Starbucks, McDonalds or iTunes.
- You Need a Budget teaches you how to manage your money and get ahead of your finances each month. You'll learn how to track your expenses, stick to a spending plan and make your money work for you.
Check in at the end of the month
Review your budget at the end of each month and see where you can make adjustments. If you consistently have money leftover in your food category, consider allocating more into your savings instead.