New year, new saving habits...
ARE you looking at your postchristmas finances with despair?
Maybe you had planned not to get into debt over the holidays, but things just ran away from you?
Regardless, it’s something to avoid next year with a resolution to start a savings habit.
This has a lot of benefits including improving financial discipline, increasing awareness of your money flow, and, of course, it helps you to plan and look forward to the future.
Before you start putting half of your pay cheque away, in a fit of enthusiasm, here are some tips for savers.
Find out if it is possible: To prevent the disappointment of starting something only to find out you miscalculated and have to stop, it is vital to see if you have anything to spare. Saving is a nice idea but if 100% of your income goes on essential expenditure like kids, school, food, rent, mortgage or health, then there just may not be anything left to save.
This indicates you are living in a danger zone, where there is no buffer for emergency expenditure. This is not uncommon, but it pays to know where you stand. If it is not possible, then maybe it will be another time.
Have a target: Setting financial goals is clearer than most other personal goals, in that money is countable. So, saving €50 per week for 20 weeks will definitely get you to €1,000. It is impossible not to. Setting a target will focus your attention, motivate you and give you ideas on how the target is to be achieved.
Don’t save too much: Be realistic. If saving causes too much pressure on your monthly budget, you will be under pressure to keep it up. It becomes a drag and could lead to you stopping.
Stopping is as dangerous as not starting as you may feel you have failed, not start again and emotionally you might feel that you might as well spend what you have saved. Back to square one. Keep it low and you can always increase when you feel comfortable.
Identify what changes you need to make: Taking one path means you forego another. If you commit to saving is there something you have to give up or stop? Maybe it is meals out, takeaways, nights out or shopping...
Have something to motivate you: Thinking about it is the easy bit. Put away a comfortable amount. Keep reminding yourself of what it is for and how it will make you feel. This will solidify your commitment.
Finally, savings clubs are a great idea to get you started. Get together with a trusted group and agree an amount to save each week. Someone collects it all and gives it to a different member of the group each week as a lump sum.
Keep savings low and you can always increase when you feel comfortable