You may be thinking, “I’m not an author” or “I don’t know where to begin,” but that shouldn’t stop you from writing your own savings success story. It’s easier than you think, and like every good story, you need a few key elements.
You are the star of your own savings success story. Of course, depending on your situation there may be others who play important roles. As you look at your finances, consider these items:
- Whom do you pay bills to on a regular basis?
Make a list of your monthly and annual expenses. Is there any way you can cut back on these to allow you to save more?
If you pay rent every month, can you take on a roommate to share expenses or move to a less expensive place? Consider refinancing if you make a house payment.
Next consider your car payment. Can you get by with a less expensive car? Have you shopped around for the best insurance rate? If public transportation is available, consider that to save money on gas.
You may belong to a gym. Living in a northern climate, that may be a necessity for part of the year, but is it possible to use the beautiful outdoors for the other six months and skip the full year membership?
Finally, how much are you paying for your internet and streaming services? It’s easy to keep adding on and then realize you aren’t watching many of them. Can you cut back in this area? There are often great opportunities for saving here if you think about your needs versus your wants!
- Whom are you responsible to support financially?
You may have a child or may help your parents. Your commitment to supporting them is likely nonnegotiable, but it’s important to figure them into your storyline.
- Whom are you with when you spend money?
This is one that can really change the outcome of your story. We’ve all been in those situations when we spend too much. Go shopping with a friend and they encourage you to spend extra on those jeans or pair of shoes. They may be the same one who thinks you need to spend a night on the town and before you know it, you’ve blown your entertainment budget for the month in four hours. Identify the people who may be your savings nemeses and develop a strategy for the next time they call. You may ask them to come over to your place instead of going out or only take enough cash with you so you can’t overspend.
How will you create the environment where you can save successfully? Consider a budget tracking device like Mint or PocketGuard. You can also make it as easy as an Excel sheet or writing your purchases in the notes application on your phone.
Do you have a location where you keep all your financial records so you can easily track expenses? Some people prefer a file in a desk drawer or a plastic tote. Others will track it on their laptop, but if you do that, make sure you are backing up your files on a regular basis, so you don’t lose your history.
As you take a look around you, identify items you may no longer need, like an expensive bicycle you haven’t ridden in years. Perhaps you can sell that and place the proceeds in savings. Also, would it make more sense to purchase a couple of hand weights, so you can lift at home rather than at the gym?
You can also influence how you save by creating automatic deposits when you are paid if your employer offers that. Commit 30% of your take-home pay to your savings account until you have three to six months of expenses saved and don’t deposit that in your regular checking account. If your employer doesn’t offer automatic deposits, then you can do it on your own. Pay yourself first every month by placing money in savings, pay your regular bills and then the rest is what you have left for the extras.
Every good story has a plot that resonates with the reader. In this instance, you are the one who not only writes, but reads the story! This becomes your motivation for making the right choices.
Your plot must include a savings goal. Realistically look at your budget and identify the wants versus needs. Establish how much those needs will cost you every month. If that takes up more than half of your take-home income, then you should consider how you can cut those expenses. This is where it gets interesting.
If you need to cut expenses, you can take two different approaches. The first is to look at it from a negative perspective and feel like you’re being punished. As the main character, you can trudge through your days feeling sorry for yourself, wishing you were someone else and making yourself the victim.
The other way is to take it on as the challenge, celebrate the little wins and treat yourself as the hero along the way. Can you turn saving into a game? How many times can you avoid paying full price? Check out thrift stores and garage sales for deals instead of buying brand new. You can meet interesting people along the way who become part of your story.
As you accumulate your ‘hero’ moments, set a reward for yourself that doesn’t cost much. Maybe you schedule time with one of your favorite people or spend the afternoon at the park or local zoo. If you’re at home, treat yourself to one of those movies you’ve wanted to watch and some microwave popcorn.
A good push and pull between right and wrong, good and evil is essential to every story. The same is true when it comes to managing money. For every item on your list, there are choices that can be made that will take you to a good place, or not such a great place.
When you write your story, think about the items that cause those conflicts for you. Make a list of the things that tempt you and prevent you from meeting your savings goal. Here are a few ideas that trip people up.
- Online shopping
- Buying high-end clothes
- Shoes! Shoes!
- Sports equipment
- Eating out
- Video games
- Gourmet food items
We all want the “… and they lived happily ever after” ending. Every day, you are writing your story and the choices you make influence the ending. It doesn’t matter if you make $20,000 per year or $2 million per year, the principles are the same.
- Follow the 50:30:20 principle. Fifty percent of your take-home pay goes toward expenses; 30% goes into savings, and 20% is for the extras.
- Every time you receive a paycheck, place part of it in savings.
- Track your needs versus your wants if you can’t meet the 50:30:20 rule. Are you spending money anywhere that you can live without?
- Look at every expense and determine if you can save money somewhere.
- Consider your job. Will going back to school allow you to make more money? It doesn’t need to be a four-year degree to make a difference in income. There are many good-paying jobs for those who attend certificate or technical schools.
Imagine your self five years from now. Where do you want to be financially? You won’t get there if you don’t start taking the right steps in writing your story today, so your ending can say “… and I lived happily ever after.”