In honor of Financial Literacy Month, we created a microsite that offers 30 simple steps to financial wellness–one for each day of the month. To enrich the experience, we asked some amazing people to guest post during the month on a topic that is related to the day’s step. Their dedication to financial literacy is truly inspiring! Today, Green Panda Treehouse blogger talks about saving for your goals.
Having some savings set aside is a common goal many people have, but one that many people have a hard time with. Two reasons are that people believe that they have to completely change their money habits were they feel you have to constantly check your budget.
Automating your savings can save you time from manually moving your money to a different account every week or month. Automating can also protect you from spending the money on something impulsively. Most banks and credit unions offer free bill pay and account transfers. You’ll only need a few minutes to set it up.
The bigger question for many people is, how do you find the money? It's easier than you may think.
What's the ONE expense you'd like to save on for the next 3 months?
Try to cut one category down 25% in three months. Let's say you buy video games, sometimes too much to keep up with at times. Set a goal to decrease your expense by 25% in three months. For example if you usually buy a game a week (~$50/game) by the end of the three months, you would buy 3 games a month. You'd set aside the $50 in a high interest savings account. By cutting your spending 25%, you’re saving some money without depriving yourself of something you obviously enjoy.
Now that you automatically set aside some money; it’ll be easier as you look another expense and repeat the process within 3 months. This time you might look at how much you eat out. Instead of completely avoiding going out to eat, just reduce it by one or two dinner a month. That reduction could save you $40-$80 each month, which can be transferred to a high interest savings account.
If you want to repeat the process for another expense, you can build up your savings faster or you can leave it as is and make no further changes with your budget. Either way, you’ll be in a better financial position than many of your peers.
Green Panda Treehouse is a personal finance blog for college students and recent graduates. The blog shares personal stories from the author's life as she learns about personal finance.