Pay yourself first: How developing the habit of savings can mean lifelong financial security
Saving isn’t always easy. A recent Bankrate survey revealed that 56 percent of Americans feel they don't have enough money in savings, and 60 percent can’t cover an unexpected expense.
Having a savings plan is one of the best things you can do to ensure your financial security.
Not only can savings help with short-term issues—but it is also incredibly important in the long-term. Year after year, the money you save grows, making it a good way to work towards larger goals like retirement and financial independence.
Combatting the natural urge to spend is something that takes practice and patience. Over time, you’ll learn to be smart about your money and use it in a way that works for you.
Here are three easy tips to get started today!
Begin with small, focused, and specific goals
Developing any habit is difficult. You might do well for a few weeks, but eventually, the initial enthusiasm fades, and you abandon the pursuit. The anti-dote to giving up is visible progress. That’s why it’s important to set goals.
Deciding to start by saving up to $1000 or $2000 will help you continue the habit. You’ll be excited as you see the numbers in your account go up and up, getting closer to the desired amount.
While it’s good to have more than a thousand dollars in your emergency fund—ideally, you should have enough to cover 3-6 months of expenses—you don’t need to worry about that at first. You’re just getting started. Keep it up, and the rest will come eventually.
Pay careful attention to your spending
If you want to save anything, you need to know where your money is going. That means looking back at past purchases and tracking your spending. Once you have an idea of your habits, you can restructure them to make savings a priority.
The first thing you should check is that you are spending less than you make. If you can only afford your lifestyle by putting expenses on credit cards, that should be a major red flag. You need to have something left over at the end of the month.
Next, look where the money is going. Sometimes we spend without even realizing it. Often, money is lost on impulse buys like that extra item at the checkout counter or an expensive cup of coffee every morning. With automatic subscription charges, you might not even notice money is being withdrawn from your account. If you’ve signed up for services you no longer use but are still paying for them, that’s a good place to cut.
Cultivating awareness is one of the best ways you can get in the habit of saving. Spend intentionally and live within your means. If you keep these in mind, you’ll be one the right track.
Don’t let it stress you out
Trying to manage your finances can feel overwhelming, but this shouldn’t stop you from taking initiative. Just keep it simple. Building your financial future doesn’t have to be complicated, and you certainly don’t need to be an expert to spend responsibly. Stick to the basics: decide how much you will put away each month, and do it!
Don’t worry about opening an account for everything, coming up with intense budgets that you don’t follow, or planning out your entire life. None of these are realistic and will probably end up discouraging you more than anything else.
The most important thing is to just start. Later, you can consider ways to make your strategy better. You can start learning about investments and other ways to save. For now, don’t try to do everything at once. Just do some initial research, open an account, and start putting away some money each month.
Know your options: picking the right account
Before you can start saving, you’ll need to open an account. Nuvision has a variety of options, so you can tailor your plan to best fit your goals and personal needs.
For long-term savings, certificates offer a great return. These high-yield accounts have some of the best rates on the market while remaining free of risk and fluctuations.
Money market accounts function differently than your traditional account. Known as high-yield accounts, you’ll earn more money from interest each year. Even though they have better rates, they still allow you to withdraw without penalty. This ensures you still have access to funds in the case of an emergency.
A savings account functions as a safe place to keep your money and save for different life goals, all while earning interest. Nuvision offers multiple savings plans that can be customized to your specific situation.
Save for life goals with the advantage of being tax-sheltered. These accounts are a good fit for those looking to save for retirement. They can also be used for a number of other purposes, like education and other life goals.
To learn more about Nuvision’s savings options, click here.
The information contained within this article is for informational purposes and should not be considered financial advice. Everyone’s financial situations are unique and you should consult a financial advisor for assistance with your particular situation and goals.