We are going to walk you through the 5 steps checklist on how to save more money & build your savings account but before we dive into the strategies, it’s important to understand that if you don’t have much in savings, that’s okay.
The truth is that most people don’t save because they don’t think it’s important. Saving is important for many reasons including saving for an emergency, a lost job or down payment on a house.
The goal of saving it to give you a buffer in times of need. If you have a little extra cash stashed away in your savings account, you will sleep better at night. I promise.
Not only will this give you peace of mind during tough times, building the habit now of saving money will pay you back later once you reach your savings goals because then you will be able to take the money you were saving and invest it and then make your money work for you!
Let’s dive into the 5 steps checklist on how to save more money & build your savings account!
Do your budget. You will not be able to accurately decide on how much money you save unless you know a ballpark average of how much you are earning each month or pay period and how much you are spending. Read this post to learn how to walk through that process and download our free budgeting and financial goal setting worksheet. Just enter your name and email below and we'll send it to you!
Understand your disposable income. Disposable income is essentially how much money you have left over after you figure all your living expenses such as groceries, rent/mortgage, and other bills. If you have your disposable income number, then good!
If you are like many American families and don’t have a whole lot left over after your bills, don’t freak out. You can find ways to earn extra money on the side and cut back on your bar spending or buying that soda every time you stop for gas.
There are ways that if you are completely broke at the end of your pay period cycle that you can make some cash through a side hustle like selling your unused furniture on Ebay, driving for Uber and Lyft, or just picking up some extra hours at work.
Now that you know how much you have leftover, it is time to decide how much of it you are going to save. A common savings rule is the 50/30/20 rule. The rule states that half of your paycheck should cover your necessities, 30 percent should go to discretionary purchases and 20 percent should go toward savings. Do this math and figure out if it will work for you! If it doesn’t, no worries. You can work towards it, anything is better than nothing!
Set your goal and make it a passive process. You want to set the goal of saving up at least an $1,000 emergency fund ASAP! This will give you the safety buffer you will need to make it through most common emergencies like a minor car repair. Your next benchmark should be to save at least three to six months’ worth of living expenses.
Take your budget sheet and add up how much all your expenses are and multiply that by six. This is your target savings goal! Once you do this, set up a monthly reoccurring payment to your savings on the day you get paid so it is passive, not active. If you do this, you are more likely to succeed and won’t be tempted to not cancel the payment on tight months.
Choose where to save your money. This is one of the most important steps because it will dictate how easily it is to access your money. The goal of the savings account is for it to grow. You don’t want to be able to access your money during a weak moment when you want that item from the mall or on Amazon that you haven’t budgeted for.
So this is why we suggest you open a high-interest savings account that you do not have a debit card for. I have practiced this strategy for several years and it has paid off well for me. Literally. We have been able to watch our accounts grow because we practice these simple strategies to save more money.
Don’t forget, if you haven’t started yet, no problem! You are not the only one.
So much of saving money is a mental game with yourself. You cannot say that you don’t know the right strategies any longer. Put these to practice. You won’t regret it.
To help you reach your goals we created a free downloadable cheat sheet of the 5 steps checklist on how to save more money & build your savings account, just insert your name and email below and we'll send it to you!
Print if off, place it on your desk or refrigerator, and remember that your goals are reachable if you follow the right strategies and stick to them! Your future self will thank you. Once you build these habits, just like any new good habit, you will learn to appreciate it more and more over time.
Zack is one of the co-founders of FreeUp and is in charge of setting the strategy for the blog and managing the day-to-day operations. When he isn't plotting new ways to create awesome blog content, he likes to geek out about global affairs, ride motorcycles and can probably be found hiking somewhere during his days off.