There are many levels of savings. This list contains some things that can be done immediately and others that you can work on getting to in the future.
1. Work on finding steady, stable employment
It’s hard to pay the bills and build for the future without regular income. If you find yourself in this situation, do what you need to do to build your skills and find employment. We realize it’s easier said than done in this economy. Our employment and career page provides some resources. If you are without a job and/or experiencing a money challenge, we provide some tips about surviving a crisis here.
2. Create a plan to pay off your debt, especially high interest rate debt
It’s difficult to build for the future when you are paying off the past. Create a plan and do what you can to implement it.
3. Avoid future bad debt
Even if you don’t have money to save, you can help your future financial situation by not making your current one worse with additional bad debt like credit cards and payday loans. Anytime you take on a debt, make sure it is part of a reasonable plan and know how much it will cost you to pay off.
4. Save by spending less
Another way to save if you don’t have a lot of money is to cut down on your expenses. Start by assessing where your money is going and focus on the expenses that are taking the majority of your money, perhaps housing, transportation or food. Explore how you can cut those expenses down to free up some money. AFTER you’ve looked at the big expenses items in your life, you can clip coupons and pinch pennies if you need to. Avoid spending sprees that you will regret. Be diligent.
5. Make savings a habit by putting away something
Even though you may not be able to save a lot of money, it is good to get into the habit of saving, even if you start small. Set a weekly savings goals that you can meet.
6. Save for a small emergency fund
One of the reasons you want to save for is when an unexpected expense happens. Try to save $500-$1000 in case of an unexpected expense. What do you do if you get a parking ticket or a minor car repair? If you have some money saved up, you can use that, rather than using a costly mode of credit, like a credit card, that will come with interest and fees and cost you a lot more if you are unable to pay it off immediately.
7A. Start saving/investing for retirement.
We already mentioned saving for retirement is a major money management objective. You will definitely want to save for retirement, when you will no longer have an income (if you truly retire) and social security will not be enough to live off of. This is where investing comes into play to grow your money enough for retirement. If you plan well, you’ll have your savings to live off of. Savings can create a peace of mind and freedom. Remember the power of compound interest: the earlier you start, the more it works for you. Even if you can’t start now, do what you can to get there. Learning about money management and investing while getting out or staying out of debt is a great start. Our investing page gives you things to think about when considering your investment options.
7B. Save for a financial goal
You may want to build up your savings for a future financial goal, such as a down payment on a house, though it’s not a necessity for financial stability. Whatever your goal is, make sure it’s part of a sound financial plan that you can afford.
7C. Save for a security fund
When you get older and can build your savings, you may want to create a security fund that could get you through 3-6 months of a financial emergency, like a job loss or health problem. A security fund can temporarily help you weather a financial storm and buy you some time while you work on other options.