- Automate where possible.
- Track your spending.
- Make little changes and stick to them.
- Be smart when it comes to credit.
- Delay gratification.
Like dieting and exercising, saving money is one of those things that all of us know we should be doing, but often don’t. With everyday expenses, and milestones like sending your child to college or retiring in the distant future, savings quickly fall off the radar.
The good news is that it’s relatively simple to become better at saving on a consistent basis. Here are five steps to get you started:
1. Automate your savings.
By setting up automatic contributions to savings and investment accounts, you can literally put your savings on autopilot. Work with your bank to set up automatic transfers on a bi-weekly or monthly basis into your savings or investment accounts. Automating this process will ensure that you save on a consistent basis and aren’t tempted to spend the money on something else.
You can kick things up a notch with a program like “Bank your Change” by MidWestOne. When you enroll in Bank your Change, every time you make a purchase with your MidWestOne Debit Card, the amount is rounded up to the next whole dollar and the difference is automatically deposited into your savings account.
2. Track your spending.
Knowing what you spend can have such an eye-opening effect that it can completely change the way you manage your money. Discipline yourself to writing down everything you spend for one month. When you review your expenditures, you’ll be shocked at how quickly little purchases – such as lunch or coffee – can stack up. Tracking your expenditures will help you eliminate spending leaks and build savings.
3. Delay gratification.
No matter what your financial goals are, if they are worthwhile, they will require persistence and patience. To do this, you must consistently work at rejecting instant gratification in favor of delayed gratification to achieve each goal. So instead of going on a spending spree with your bonus money or tax refund, deposit 90 percent of the money directly into your savings account. That way, you’ll still have 10 percent to treat yourself.
4. Stop spending $5 bills.
While this may sound like a strange strategy, it’s pretty effective. Instead of saving change, start putting away every $5 bill you come across. If you stick with it, you’ll be surprised at how quickly those dollars begin to add up.
5. Use credit wisely.
To minimize interest charges associated with credit cards, make a commitment to use them prudently. Try to limit your credit card purchases to those you can afford to pay off in full at the end of each billing cycle. For larger purchases, such as cars or perhaps a vacation, work on your delayed gratification (see step #3) skills and start saving up for the purchase in advance to cut down on any interest charges.