Wouldn’t it be great to take a vacation, buy a car, or even own your own home someday? Well, the only way that will happen is if you start planning—and saving—right now! Saving money is a habit you can start any time. Why not now?
The sooner you develop good saving habits, the better off your financial future will be. Here are 5 tips to start saving money:
Start with a plan. In her 2006 book All Your Worth, Senator Elizabeth Warren offered up a simple, but sound strategy for spending she called the 50-30-20 rule. The idea is that 50 percent of your take home pay should go to your needs, 30 percent to your wants and 20 percent to savings. Rent, utilities and food are needs. Vacations and big screen televisions are wants.
Learn about healthy (and unhealthy) spending habits so you can make good choices. While food belongs in that 50 percent category, food that you’re eating out doesn’t! Every time you spend money dining out, you’re taking money away from your savings. Even if you only grab coffee and breakfast at a fast food joint a few days a week, that $5 or so can add up. At three days a week, $15 = $780 in a year. Is that really how you want to spend your money?
Save something every month. One great way to save is to have money automatically deducted from your paycheck and deposited into a dedicated savings account. If your employer doesn’t offer this service, consider setting up a “don’t touch” account on your own and contributing to it every month. You can also instruct your bank to set up an automatic recurring transfer of money from your checking to savings account. Once you get into the habit of saving, you’ll enjoy watching that savings grow.
Pay down your loans. Another way to save big money is by paying off big interest loans. Do you have credit card debt? Get rid of it! Do you have student loans? Consider doubling-up on your payments whenever you can or applying any lump sums you might receive (like tax refunds) directly to your note. The sooner you pay off loans, the sooner you can add that money into your savings. And remember, defaulting on your student loans can cost you big time!
Invest in your own “human capital.”1 Financial experts agree that the most important asset in your personal financial portfolio is YOU! If you want to save more money, you need to make more money. And the best way to do that is to always be learning and reaching for more. Education, career training, and continued workplace experience increase your marketability and your value on the job market.
If you want to increase your human capital, start with an education. Charter College offers career-focused programs in accounting, business, criminal justice, healthcare, hospitality, nursing, information technology, paralegal studies, veterinary assistance and the trades. If you’re ready to change your life, start here.