Looking into the future, what would it look like if you are financially stable and not worrying about money? Would you feel better prepared and more independent? Would you feel you could weather some of the bad storms in your life? Do you think you would be able to achieve your goals in life? Would your life be less stressful? Does financial worry affect your mood and health?
Ways to Find Money
Saving money seems like an overwhelming task. I always felt I didn’t make enough money to save. Finding money to save can be a dilemma. Consider these three ways to find money to save:
- Reduce spending by changing your spending habits or by redirecting money into savings.
- Increase your income by taking on a part time job or doing some odd jobs.
- Do some combination of both one and two.
Build an Emergency Fund
Building an “emergency fund” or a “life happens” fund is one of the most important steps you can take to building financial security. How does one go about finding money to save? Start by saving small amounts each time you get paid. The key is to get into the habit of saving regularly. Then the small amounts will begin to add up. Being able to see your savings grow is a strong motivator to save even more.
Track Your Spending
The most effective way to find money is by tracking your spending. Simply taking a look at where your money is going for at least one month, if not three, will enable you to see a trend in how you spend your money. You’ll be able to identify money (patterns) and make adjustments in your spending habits. Track your spending in the notes section on your phone or in a special (pocket size) notebook. Use whatever works for you.
How can someone reduce spending in some areas by doing things a little differently? Small amounts of spending does add up over time. Try reducing or cutting out those small frequent purchases. For example, say you spend $1.00 per day in the vending machine at work. The math is easy to compute as saving one dollar a day for a year equals $365.00. After 5 years that is $1,826; after 10 years that is $3,652 and after 20 years that equals $7,305. Daily and weekly expenses can add up to hundreds or thousands of dollars per year. Now think about what you could do with this money if you had not spent it in the vending machine.
The easiest way to save is automatically. Saving automatically means you set up a process to save at regular intervals. That can be savings on a daily, weekly or monthly basis. Saving automatically helps you not forget and use the money for other things. Here are a few savings tips:
- Every payday, having your bank or credit union transfer a fixed amount from one account to a savings or investment account at a certain time of the month is a step towards your savings goal.
- Participate in an employer sponsored retirement plan. Some employers have a benefit with some form of matching funds for retirement.
- Save loose change in a jar. That certainly adds up over time if you put all that loose change into a jar everyday and don’t spend it.
Reducing debt is also a way to save money. It will take planning, discipline and patience to reduce debt. Seeking financial counseling may help you understand how to properly manage your finances. Start by making a list of your debts, the amount and the interest rates for each. Work on paying down your higher interest debt first. Taking steps now will help you gain control of your financial situation. Check out PowerPay.org; a financial calculator program that can help you discover how much you can save by paying off debt and rolling payments to get out of debt faster.
Make a Plan
Take action now and pledge to save money. Setting a specific savings goal with a dollar amount and writing it down is important. Research tells us people that write down their goals are more likely to achieve them than people who do not take the time to write it down. Writing it down, helps to keep you on track about what you are trying to accomplish. Making a plan to save is the most important step you can take toward your financial future.
Check out https://www.facebook.com/moneysmartcolorado for Colorado State University Extension Agents bringing financial education, programs and discussions to Coloradoans everywhere. For more information on personal finances check out Colorado State University Extension’s publications at https://extension.colostate.edu/topic-areas/family-home-consumer/