While it’s true that many people live from paycheque to paycheque, there are some simple ways to change your financial habits so you are saving money each month, instead of spending it all.
Here are a few tips:
1. Pay Yourself First: One of the secrets to increasing your savings is to pay yourself first. Put some money into a designated account before you do anything else. Rather than trying to save money at the end of the month, put it away first before it gets eaten up by other expenses or you are tempted to spend it.
2. Automate Your Savings: Use an online banking account to set up an automatic deposit every month into your savings or investment account. You can set the transfer to take place a few days after your paycheque is deposited into your bank account. This is another way of ensuring that you pay yourself first.
3. Create an Emergency Fund: The experts suggest you have at least three months’ pay set aside in case of emergency. You’ll hopefully never use it, but an unexpected illness or job loss can leave you in a tough situation financially. As with your other savings, deposit money into the emergency account every month before you pay other bills. Once you’ve reached your target, keep contributing to the fund and let the money grow. Studies suggest that even $500 in an emergency fund helps with your financial well being.
4. Record Your Expenses: The first step to saving is to figure out how much you spend. Keep track of all your expenses in a single month. That includes household bills, groceries, mortgage debt, even that daily cup of coffee. Once you have the data, organize it by categories. This will help you with the next step.
5. Create a Budget: Once you know roughly how much you spend in a month, you can organize your recorded expenses into a workable budget. Your budget should show how your expenses measure up to your income: Are you falling short every month or do you have extra? Either way, a budget can help you plan your spending and limit overspending. In addition to monthly expenses, be sure to factor in expenses that occur less frequently, such as car maintenance or large purchases, such as furniture or even clothing.
Of course, there will be times when you are short of money. Perhaps you need to buy a new car, cover some expensive dental work, or pay some legal expenses related to the purchase of a new home. In such situations, you might want to consider the services of short-term loan providers, like SkyCap Financial. SkyCap Financial provides loans up to $10,000 and the application process is quick and easy, followed by a fast loan decision. If you’re improving your spending habits, you may never have to use a service like this. But it’s good to know it’s there.