Do you always feel like you’re not saving enough money? By the time you’re done with each paycheck, there’s nothing left over. Let’s look at options to help you save money from your salary so you can get ahead and reach your savings goals.
Having a plan for your savings will help you make sure you set aside money from your salary for the future. With a few quick tips, you can set up a plan to help you take action.
4 steps to help you save money from your salary
Saving money from your salary can be made to be an easy, automated process with a little bit of upfront set up so you can “pay yourself first”.
Let’s walk through a simple 4 step plan to help you start on your savings journey to achieve your goals.
Decide why you need to save money and set a goal
You know you should save money for the future, but you have decided why? Focusing on a purpose for saving money will help keep you on track to reach your savings goals.
For example, having extra cash saved will help keep you from falling into debt when you find yourself with unexpected expenses. Have you started building an emergency fund?
Would you like to travel or redo a room in your home? Having money for large purchases will allow you to take the time to enjoy a few things in life without worrying about breaking your budget.
And don’t forget about holiday gifts. A little upfront planning helps you avoid paying interest or needing to skip a holiday.
Set a goal you’d like to achieve. It doesn’t matter how small or large it is. Start somewhere and you can increase it in the future. The first step is building a habit of saving. Having a clear reason for why you want to save the money will keep it as a priority in your budget.
Set up your budget
If you don’t have a budget already, it’s time to take a look at your regular expenses to figure out how much can save from your salary each paycheck.
Depending on how fast you want to reach your savings goal, calculate how much per paycheck you need to set aside. Or maybe as a starting point you simply decided to save a certain amount. Great idea!
Once you have an idea of what your expenses look like, you may need to make room in your budget for your savings goal. Even for my budget, I needed to make room for a few savings goals in the past.
If you need to find extra money for your goal, try taking lunch to work or delaying any extra spending. Find ways to cut down on extra expenses while you work on your goal.
Open a separate savings account if you don’t already have one.
Set up a separate account to keep your savings goal money in to prevent it from being spent by accident.
And it’s nice to be able to watch it grow without having to figure out what money is for bills and what money is for savings.
If this is a long term goal, such as an emergency fund, you can also look for high yield savings accounts that pay you higher interest. Having a little passive income on your savings is a nice added bonus.
Set up direct deposit from your paycheck
Automate. Automate. Automate.
If you already have direct deposit for your paychecks, check to see if you can split your paycheck between multiple accounts. Sending money directly to your savings account helps you pay yourself first. And you don’t risk forgetting to move the money on payday.
Another option is to set up an automatic transfer within your online banking. They usually have options to set up recurring transfers between accounts.
And a final option is for you to put a reminder on your calendar to manually transfer the money each payday. If you’re not comfortable with automatic transfers, the calendar reminder works well too.
I use a combination of these methods because I have multiple savings goals I’m always working on.
Start with one goal and add more in the future once you create a system you’re comfortable with.
Another option for saving money from your salary
Most of the savings goals we’ve talked about so far are for the short term. Don’t forget to check out your employer’s retirement plan options, especially if they provide a contribution match.
Usually, these contributions are tax-deferred, reducing the income taxes you pay now. Set yourself up for the future even though you won’t be able to touch the money any time soon.
Wrapping up. What else are you doing to save money from your salary?
Saving money for the future, both short and long term is great for creating wealth and financial wellness. Create a plan and automate your savings as much of the process as possible to ensure you’ll save money from your salary and reach your savings goals.
What other tips have helped you save money from your salary?
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