Finance Quick Answers
I want to start saving some money each month, but don't know where to start. What do you suggest?
1. Make a list.
Decide what you want to save for - having an incentive will help you. Choose a time frame for when you would like to attain your goals (example: I would like to have $500 for a new couch by next May).
2. Determine an amount.
After you have determined what you want and when you want it, determine how much you would need to save each month to reach that goal. You may need to adjust your time frame if the amount needed each month is not realistic for you.
3. Make saving easy for you.
Following are some tips to help you (Bozworth, 2000):
- Pay yourself first. Don't wait until the last of the month or nothing will be left over.
- Have your savings automatically deposited from your paycheck if possible. If you never see the money in your paycheck, you won't miss it as much, and you won't be tempted to spend the money elsewhere.
- Save bonuses, cash gifts, inheritances or other unexpected income.
- Once you have paid off a loan, continue paying the amount, but pay yourself instead of the creditor.
- Be frugal in order to free up resources for savings.
- Save at least half of your next raise.
- Break a habit. Save the money that you no longer use toward that habit.
- Empty out your wallet each night and save change and small bills in a jar. A little goes a long way!
Source: Bozworth, Carole. Getting Started-Saving and Investing. Human Environmental Sciences Publication GH3520.
Last update: Tuesday, July 15, 2008