If you are tired of using credit cards for unexpected expenses and vacations you need to make a change with your savings! I've compiled a few ways that we currently or have previously used to grow our savings. I touched on some of this is in another post but I wanted to go into deeper detail. An important thing for this is your mindset; your savings account is not just "extra" money. Be firm in knowing what you are saving for and your financial goals.
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| I love Dave Ramsey quotes! |
One of the best things you can do to increase your savings is to automatically have a certain percentage of your paycheck go into savings. Ideally you would want to have it set up for 10%. If that seems too much at first, try 5% and once you're used to that, increase it until you get to 10%. The key here is to have your direct deposit (everybody uses that now, right?) set up to automatically deposit that percentage into a savings account. When figuring our income for our budget I only count the 90% that goes into our checking account, it doesn't take long to get used to a slightly lower amount.
Set up two different savings accounts. Use one as an emergency fund and keep it at a set amount. If you have to dip into it for an emergency make sure you build it back up asap. Use the second one as savings for anything big, such as vacations, birthday parties, special occasions, etc. I like keeping money separate because it helps in knowing where you stand, and you're less likely to go over your budget. As far as the amount that you want to keep in an emergency fund, it really varies based on your expenses. If you own a house, I recommend having enough to at least pay your mortgage for 3-6 months. If you rent and don't have a lot of debt you could probably get away with less. One thing I want to do this year is increase our goal for our emergency fund, right now its really not a large amount but we are consistent with it. I would like to increase it by 50% each year so that when we do eventually buy a house we have enough to cover our mortgage starting out.
What we've done in the past to save money for a vacation was any change or cash we had, we put in a jar and let accumulate. We ended up with around $100 to use as spending money on top of what we had already budgeted for the trip. Now of course this only works if you use cash somewhat often, which we don't now. We are planning a trip to San Diego later this year to see some of Howie's family; and while we have planned out how we're paying for plane tickets and some spending money, I'm trying to find a way to save even more without making a big dent in our checking account. My plan right now is each pay day or maybe even weekly withdraw $10-$20 and put in our change jar. I want it to be a small enough amount that it doesn't affect our budget but enough that we accumulate a decent amount before we go.
If you were to look at what we spend big chunks of money on its definitely not material things, we love going places and having experiences. We also both have family that live far away that we try to visit each year. To be transparent both of our parents are generous and help us out sometimes when traveling. We appreciate it so much and hopefully someday we will be able to do that. That being said we also plan our trips way in advance. We usually know 6+ months in advance where we want to go and when. This gives ample time to plan and save. We do not use credit cards for anything while traveling. We know how much money we have saved and budget to that amount.
The most important part of getting your finances together is really such a mental thing, I cannot emphasize that enough! Setting goals, sticking to them, remembering those goals when you want to make an expensive purchase that you probably can't afford. That vacation you're planning will be a lot more enjoyable when you're not worried about the credit card bill that's waiting for you when you get home!
If you're looking for specific advice on a financial situation feel free to ask, I would love to help! Or if you have a topic you would like to read about, let me know😄
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