The future is something unknown. That causes mixed feelings and even fear. But there is one thing that can keep you calm. Building a savings account comes with no risk. You can get money from it whenever you need it and use it for any emergencies. Another benefit is that it isn’t as difficult as it may look. Follow these steps and learn how to build your saving account effectively.
Define your savings goals
The first step in achieving anything is knowing what your goal is. According to Locke’s goal-setting theory of motivation, it’s more likely to get effective results when goals are specific. When building a savings account, you have two options. Choose short-term goals or long-term goals.
Short-term savings goals
These include buying a car, saving for a vacation, or starting an emergency fund. Short-term means that the amount of money will stay in your account for a short time, usually up to 5 years.
Long-term savings goals
When we talk about long-term goals, we often refer to saving for retirement, college, marriage, or paying off a mortgage. These are all goals that you will achieve after five years and more of saving. Because of this longer saving window, it is hard to say which savings plan is the right for you. Many things will change, and your long-term goals will probably change with them. A quick tip is to plan smaller achievements within the long-term goals. For example a smartphone, weekend trip, notebook, or a massage.
Take control over your expenses
We all know that feeling when we get a paycheck and then we feel the urge to buy everything that we’ve ever dreamed of. And even when we get to the shop we buy millions of things that we don’t actually want or need. Researches show that we spend twice what we did 50 years ago. And an average person between the ages 41-56 has a credit card debt of $140,643. The numbers are kinda scary. But that doesn’t have to be you! Control what you spend your money on. You can do that by asking yourself questions. Is it worth the price? Do I really need it? Does it meet my expectations? If the answer is no, then it’s simple. Don’t buy it.
Dollar after dollar
One small step after another, and you’ll have enough money to buy that dream car. It doesn’t have to be one dollar. You can decide on your own how much you want to put into a savings account every month. Discuss it with your bank or employer, and they can do it for you. You won’t even realize that the dollar is missing, and at the end of the year, you’ll have a great amount of money in your savings account.
Pay cash for everything
There’s this one saying that goes like this: When the amount of money in your account stays the same, you’re not really spending money.
And it might not only have a psychological effect on you, but you can actually build your savings account by following this advice. When paying in cash, your options are limited. So you have to really think about what is worth the money.
The last piece of advice we can give you is to prioritize, and we’re not saying that it’s easy. But now that you know what your goals are, you have to take steps that will take you closer to achieving them. You may have to make some sacrifices. Like not watching TV, getting rid of satellite, or not eating out with your friends every night. Some things require sacrifices but it will be worth it.
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