I preach about setting financial goals for yourself on a regular basis. It’s a known fact that I truly believe financial stability is attainable for everyone. So I’m going to share with you some tips that helped me save up my first $1,000 my first year out of college and some things I still use to this day. Now don’t believe I’m rich. I got hit with a massive student loan in 2014 and inflation has increased at about the same rate as my income over the past 3 years so I still find myself looking at my checking account with misty eyes. But none the less hopefully this helps someone.
- Acorns – The app Acorns allows you to invest the pennies that you don’t spend when you swipe your credit card. Say you spend $56.24. Acorns will allow you to invest the $0.76 in a diversified investment account. So with each purchase you are investing pennies to the dollar in an account that will gain anywhere between 3% and 10% in returns. The cool thing about it is you can add as much money you want per month in addition to the pennies you are regularly investing. You can also withdraw your money from this account without too much hassle after you’ve reached your goal. They charge $1/month in fees for up to $5,000 and then they charge 0.25% in fees once your account is larger than that. Pretty nifty, right?
- Set up your direct deposit to put at least 5% of your monthly pay into your savings account. This is pretty self explanatory, but more than likely if you have a savings account, it accrues better interest than your checking account. Having most of your money in your checking account you’re not taking full advantage of compound interest and time and its effects on your account. Doing a direct deposit also takes the pressure off of you to remember to put money in your savings account for a month. Your job will do it for you.
- Budget your life. I kid you not when I downloaded the app Mint and set budgets for each of the expenditures I had in my life, it changed the way I use my money. I had to cut some things out (and cook more) and shortly after I saw significant change in my weekly expenses. Although eating the same things for lunch for 4 days straight wasn’t always easy, it gave me more money to put away and save for a rainy day. And the good thing is once you reach a goal it’s okay to dial back to just eating the same things for lunch for only 3 days if you want. Or maybe you’re like me and will indulge in a white chocolate mocha with soy milk and a pump of toffee from Starbucks.
Some of these are easier said than done but it’s basically like a diet for your finances. You can eat healthy and make healthy decisions with what you eat because what you put in your body comes out. If you put good in your body, good comes out. Same with your finances. If you put something in your savings account and invest, you will reap the rewards of your efforts. It kind of reminds me of the parable of the servants that were given talents according to their abilities. The ones given 5 and 2 bags of gold went on to make 5 and 2 more bags respectively. But that guy who buried his one bag, only had one bag when it was time to reconcile accounts. And that one bag he tried so hard to protect, ended up getting taken away from him because he didn’t use it wisely. There’s more to the meaning of the parable, but I’m going to leave it at this: make sure you are getting the most out of the income that you do have and don’t feel you need to spend it all when you get it. Saving isn’t always comfortable, but reaching your financial goals can make life a little more comfortable.