We’ve all been there: You set a goal — a vacation, emergency fund, down payment on your dream home — and start saving, but then you realize you’re further away from your savings goal than you would like. You decide you need to ramp up your savings to reach the goal, or get back on the right track; so what do you do?
Acknowledging that you need to change course is an important first step. Now it’s time to rethink your strategy and make adjustments to get the desired results. That way you can book that trip to Europe or make that down payment on your dream home in the earlier timeframe you had planned.
Saving money fast doesn’t mean it’ll happen overnight, but these actions can help you quickly develop a game plan for expediting your savings.
The first part of your game plan should be setting your budget. It’s critical to know your monthly income and compare it to your essential expenses (mortgage/rent, utilities, car payment, insurance); that way you understand how much disposable income you have to work with when mapping out a savings plan. After all, it’s infeasible to save $1,500 a month when you only have $1,000 of disposable income.
Some of you may already have a budget in place, but maybe it’s been a while since you’ve made any adjustments. Recalculate your monthly income and expenses to see if you have more savings opportunities since you last updated your budget. It’s helpful to make these recalculations periodically to keep your savings aligned to your goals.
Saving money fast requires sacrifice. We all know there’s a difference between an essential and non-essential expense (think health insurance vs. music-streaming services) although the line may vary from one person to the next. Now that you’ve mapped out your essential expenses and compared them to your monthly budget in the step above, list out your non-essential expenses to see how those payments affect your bottom line each month.
Next, determine which expenses you are comfortable sacrificing in the short-term to help you catch up on your financial goal. Remember, you don’t need to give up these expenses forever — just until your savings are back on track. That assurance, plus your desire to reach your financial goal, might make it easier to part ways with certain expenses.
Here are some cutbacks to consider implementing to ramp up your savings quickly:
You’ve set your budget and chosen which sacrifices you’ll make, so now comes the exciting part — actually saving. It’s far easier to monitor your progress if you open a goal-specific savings account, where you can set up automatic transfers. That way you remove the temptation to spend the money on something else; tell yourself that once it’s in the savings account, it stays in the savings account. When it comes to saving, it’s helpful to pay yourself first, and then see what you have left and stretch each dollar.
In addition, the money you save by cutting out non-essential expenses can be put in an envelope or box; then, deposit these funds into the savings account each week. Seeing the money add up can be a motivator to help you to stay on track.
Consider taking an extra savings step by using “round up” programs online or via mobile apps* that take your debit card transactions, round them to the nearest dollar, and automatically transfer the “change” to your savings.
Debit and credit cards are convenient for making transactions, but they can also cause expenses to creep up on you since you don’t see the money physically leaving your hand. Logging expenses can alert you to how much you’re spending on a daily basis, which might cause you to pull back some. You can track your expenses using a notebook or through apps on your smartphone*.
Making these sacrifices might be difficult at times. Consider keeping a picture or some token on you to motivate you through the difficult times. If you feel tempted to go shopping or steer off course, look at the picture of the vacation destination you’re saving for and you’ll find it easier to get through moments of weakness.
Saving money fast is not easy. Cutbacks that work for some might not be the best course of action for you. Consider how much you want to save, how long you have to save it, and what changes you’re comfortable making in order to achieve your goal. You may find that you don’t miss some of the cutbacks you’ve made, which can help you sustain your saving efforts for an even longer term.
We are committed to helping you reach your potential by providing personalized solutions. Our dedicated colleagues can help you find the right product to help you reach your goals. To learn more, please call 1-877-360-2472, visit us online, or Ask a Citizen at your nearest Citizens Bank Branch.
Disclaimer: Views expressed may not necessarily reflect those of Citizens Bank. The information contained herein is for informational purposes only as a service to the public, and is not legal advice or a substitute for legal counsel, nor does it constitute advertising or a solicitation. You should do your own research and/or contact your own legal or tax advisor for assistance with questions you may have on the information contained herein.
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