Monday, 8 May 2017

What Do I Do if I Have No Savings?

By Miriam Caldwell
Updated October 31, 2016
It is important to save money regularly. Your savings will provide a cushion for you if you have unexpected expenses pop up in your budget or if you were to suddenly lose your job or take a cut in hours. Your savings can also provide you the means to reach your financial goals. If you are not regularly saving money, you need to start. Here is a plan that can take you from no savings to saving regularly and change the way you handle your money.

Get on a Budget
A budget will help you diagnose your savings problem. You may have an income problem where you do not make enough to cover your basic needs. You may also have a spending problem. You may overspend in a specific category or across the board. Your budget can identify your problem areas so you can come up with strategies to make saving money easier. Once you have a list of your expenses and income, you can really begin to make changes in your habits.

Get an Emergency Fund
An emergency fund will protect your savings, since it is money set aside to cover unexpected bills and expenses. If you still have debt, then you need to have about one month of expenses in your emergency fund. If this feels like too much, aim for $1000 first. This will make it easier to focus on your other goals, because you know you have your emergencies are covered. If you do not have an emergency fund, this should be your top priority before you pay down debt or purchase other items.

Get Out of Debt
Set up a debt payment plan, and look at how much you are making in debt payments each month and then think about how quickly that could add up if you were paying yourself instead. Make sacrifices in your budget so that you have more money to put toward your debt each month. Chances are that you are paying more in interest (especially on credit cards) then you are earning on savings that you currently have.

It makes sense to pay off your debt before you begin aggressively building your savings. Take the time now to make it happen.

Find Ways to Save Every Day
When you want to save money, you need to be frugal. Find ways to save at the grocery store, on your utilities and your monthly bills. Switch plans and providers with insurance and cell phones to save money. You should consider cutting cable and choosing less expensive options to save on all of your expenses. Limit the amount you spend on entertainment so that you only spend on what is most important to you. Make a goal to cut back in your biggest categories by $100.00 each month. Once that becomes easy cut back again. Through all of this make sure you still have an allowance and some fun money to spend on things so you do not go crazy as you try to save.

Prioritize Your Savings
Once you are out of debt, and saving money, it is important to have clear goals for your savings. You may want to purchase a home and need a down payment for that. You should pay for your vacations and gifts in cash and you may be saving for that. You should also work toward saving up and paying for a car in cash. Some of your savings may be primarily for wealth building, buying investment properties or investing in the stock market.

It helps to know where you want the money to go because it helps you stay motivated to reach your savings goals.

Make Saving a Habit
Making saving money a life long habit can help relieve the stress of managing your money. It will open up doors for you and help make everything just a little bit easier. As you make saving a priority, you will begin to research prices before you go to the store. This can stop impulse purchases and make you more aware of what you are spending. You will also make your saving automatic with a monthly transfer of the amount you want to save. You cannot expect your financial situation to change until you make saving a priority. Start today.