Start Your Savings Journey With An Achievable Budgeting Strategy!

Blog | December 21st, 2021

Holiday spending is wrapping up and the new year is about to begin. Did you overspend again this season? Are your credit cards about to hit their max? Are you spending more than you can afford? The only way to step out of a debt-filled relationship with money and into one of full understanding, clarity, and freedom is to set up a budget. The sooner you start properly budgeting, the sooner you will be free from the stresses of overspending and owing money! Here are some ways to get on the path of financial freedom in the new year!

New Beginnings

January is the perfect time to get a fresh start in many areas of life, including finances. When the dust settles from shopping and holiday expenses, gather your bank accounts and make a list of your unavoidable, everyday costs. This will help you account for all the things you need, which will make it easier to calculate spending amounts for the things you want.

Budgets are Beautiful

Budgeting sounds boring, but categorizing each area will keep you on track in both spending and saving. To get started, make a list of all of the musts like food, gas, clothing, medical, personal needs, utilities, housing, etc. Add those costs up and deduct them from your post-tax income. Take what’s left over and budget what you can for entertainment and eating out while making sure you put as much as possible aside for savings. Allotting 15 percent towards retirement will pay huge dividends in the long run.

Underspending vs Overspending

The comparison between these two is obvious but the result makes a huge difference in your budget and your future. Be sure to enjoy life because you certainly can’t “take it with you.” At the same time, you will want to enjoy retirement and all parts of living which may mean you need to learn to live below your means now to save for an enjoyable, stress-free future. Think twice before making a purchase by waiting a few days to see if you really want or need it. You can ease your way into building more frugal spending habits. Perhaps when you’re first starting out, it’ll be easier to adjust to eating out one time per weekend instead of three. Keep your eyes open for every option to save. For example, is one regular meal less expensive than three kids’ meals? There are opportunities everywhere to save, and once you get in the groove, this mentality will become natural and second nature when you see the fruits of a growing bank account.

Save, Save, Save!

Now that you have figured out what you must spend versus what you want to spend, along with how much you have available to spend, move on to all the reasons you need to save! As mentioned above, retirement is a big one! Other savings may be for vacations, a new car, college for the kids, an unexpected medical emergency, or layoff from your job. Try opening an individual saving account for each of these possibilities and dreams. An easy way to watch your savings grow is to open multiple savings accounts within your own bank to have each account easily accessible and in one place. Your motivation will grow as your money does! You can open several accounts at the same bank or they can be spread out at different locations. Most companies will also match a percentage of your 401k contributions as well. So make sure to consult with your employer about all the retirement options available and which aligns best with your short-term and long-term goals.

Understanding is Everything

Now that you have a grip on how much cash you have and goals lined up to save, take it one step further with one of today’s apps! There are budgeting apps to help you understand your income and spending which in turn will put you in control over your money. These helpful apps can be set up to connect your bank account and credit cards to automatically download transactions into your spending categories that go hand-in-hand with your budget choices. Mint is a top-rated, free app to get you started towards keeping track of your budgeting, spending, and goals!

If you’re not as far along in your savings journey as you’d like to be, remember that small daily savings will accumulate into big savings throughout the course of the year. And if you haven’t started saving yet, consider making it your 2022 new year’s resolution!

Related: Little-Known Ways to Save on Your Utility Bills This Winter