Setting short- and long-term savings goals will help you wisely manage your finances. If you do it right, you’ll have the money necessary to cover not only daily expenses but also important future expenses. Need a hand getting started? Here are four proven tips for effectively saving money on an ongoing basis.
- Create a Budget
Analyze your monthly income and expenses, create a budget and then stick to it. This budget should include setting aside a fixed amount or a certain portion of your income so you can reach your savings goals. Manage your budget using a budgeting app that suits your needs.
At the same time, be aware that creating a budget is not a one-time task. Having kids, changing jobs, dealing with a health crisis and experiencing other major life events may require you to adapt your budget to suit your new situation.
- Prioritize Your Goals
Write a list of short- and long-term savings goals. Prioritize the achievements on the list so you reach your most important goals first. Be sure to write down a realistic date for reaching each of your goals, otherwise, you may become discouraged.
- Give Yourself an Incentive
It can be easy to lose sight of your goal if you are saving for something expensive such as a brand-new car, a house purchase or a holiday in Hawaii. After all, these goals can take some time.
One effective way to keep your goal in mind is to put up a picture of what you are saving for. Place the picture in a prominent location, such as the bathroom mirror, so you can look at it every day and remember what you will earn if you reach your savings goals.
- Look for Ways to Earn Extra Income
Seek opportunities to earn additional money to reach your goals. This could mean selling something you no longer need or taking on a part-time job to earn extra income. If you’re interested in investing as a way to reach your goal, use that method for a long-term goal that will take at least five years to reach.