Save $50 a monthSave ten percent of your incomeCommit to saving $500 by the end of the year
Setting a smaller initial goal will make you more likely to succeed and keep you from being overwhelmed. Once you have been able to meet those goals for several months, you’ll feel more motivated and capable of increasing how much you save. Don’t jump from trying to save $50 a month to $500. Instead, increase your goals incrementally to avoid becoming overwhelmed or discouraged. It can help to focus on one or two areas each month to look for ways that can easily reduce the amount that you spend each month, such as:
Utilities: Reduce your heat or electric bills by checking for drafts, turning off fans and lights, unplugging appliances, and raising or lowering the thermostat a few degrees.Entertainment: Try borrowing books and movies from the library instead of buying them, or cutting down on the number of streaming services you subscribe to.Commuting: Try to use public transit, bike, or walk to work instead of paying for gas and parking.
By switching to a new category each month, you develop new spending habits across a broad range of behaviors. You also make it less likely that you’ll start to feel frustrated or deprived by making the same sacrifices every month. You may have savings for:
A vacationTravel to see familyA down payment on a houseEarly retirement Education expenses
Knowing what you are saving for can help you measure progress and stay motivated. It can also make it easier to give up something you want today, such as new clothing or eating out, if you know what you will be able to have in the future instead.
Identify strengths and weaknesses in your financial healthHelp you come up with a plan for money managementTell you what types of savings you need to achieve your goalsAssist with long-term planning, such as retirement or investing
When choosing a financial planner, look for someone you feel comfortable asking questions and whose answers you can understand. If you are just starting to take control of your finances, look for a fee-only financial planner, rather than one who earns a commission from your investing. Many mutual funds and brokerages have a minimum initial investment, usually anywhere from $1000-$10,000. You can save that initial amount more quickly by keeping it in a high-yield savings account, which will earn interest as you save. You can also use that time to start learning about investing. If you are already working with a financial planner, they can help you make an investing plan and identify ways to start building wealth and improving your financial security.
