When we talk about budgeting, we usually focus primarily on those areas of a budget where actual spending occurs. We focus, for example, on the mortgage payments you need to make or on the student loans you need to repay, on the percentage that you spend on food and the amount that goes towards transportation. But rarely do we talk about a part of the budget that is not spent, by definition, but remains one of the most important: the savings.
You might be thinking, “Of course the savings aspect of a budget doesn’t need to be discussed – saving is obvious and easy.” But a surprising number of people don’t save in an adequate and optimal manner. Sure, they put aside money on a regular basis, but there is often a good deal of variation in the amount set aside or even in the frequent with which it is saved in the first place. Consequently, let’s take a look at some tactics by which you can force yourself to save more regularly and substantially:
–Use automatic deposit. Most employers these days will often use an automatic deposit feature whereby your paycheck is electronically sent straight to your bank account at the end of every cycle. Furthermore, most of these programs provide the option for your paycheck to be split up at your discretion between two accounts in the bank. By taking advantage of this and sending a certain amount to savings every month, you can insure that you won’t feel compelled to skim money off the top.
–Invest when the market goes down. People who inconsistently set money aside often do so because they are motivated by external market forces. Specifically, they see the market go down one week and decide to contribute less to their investment portfolio. This reaction, while understandable, can be detrimental in the long run. You can correct it by actually putting more money aside for investments when the market declined during a pay period. If the market goes down 3%, for example, you could decide to double that rate and increase your allocated savings by 6%.
–Create a monthly minimum. Saving plans often fail because people decide what percentage of their budget they want to save but then divert from this promise as soon as they need to purchase a big-ticket item in a given pay period. To correct this, you can make a two tier threshold for saving. The first tier reflects the bare minimum you will save every month, regardless of outside circumstances. If a purchase requires that you cut into these savings, you probably shouldn’t be making this purchase in the first place. The second tier is more fungible. If you’re buying a new car or renting a unit at StorageMart Alberta one month, you can cut away at savings in the second tier. But the goal should always be to save the full amount.
–Make goals. While it may be easy to cut corners on short-term saving goals, and although long-term objectives often appear more distant and less tangible, having a medium-term saving agenda can give you a concrete and substantial goal towards which to strive. You can do this by making a savings goal for each one-year or six-month period. Explicitly write down your goals and then check in on your progress every time you look at your budget.
These are a few of the ways you can insure more regular and dependable contributions are made to your savings fund. Far too many people think of saved money as merely money that was not used. Instead of being relegated in this way to the periphery of a budget, your savings should always be of prime importance and concern.
Martha Jackson loves to write financial articles and she is a contributory writer associated with the Debt Consolidation Care Community and has written several articles on debt consolidation, debt settlement and getting out of debt for various financial websites. She holds her expertise in the Debt industry and has made significant contribution through her various articles.