Budgeting Basics: Save First!

When you start making a budget one of the first things people tell you to do is to “Make a list of everything you spend money on”. But I want to suggest that you start by Deciding how much you want to save. If your budget is like mine there are times when saving can be the last thing on the list, we spend first and save the rest. But the concept of “Paying Yourself” or setting aside your savings immediately when the paycheck comes in is a great way to start to see your savings goals realized.

Develop a Savings Plan.

What are you saving for? Are you working towards an initial $1000 Emergency Fund, are you saving for new Furniture, for Retirement, maybe all of the above? You need to first know what your goals, write them down and start allocating money towards those goals. Even if it’s just a little bit each month you will start to see these accounts grow and for me that’s always motivating.

Save First.

It sounds simple enough, but make sure that you are setting aside your savings first when creating a budget. Remember, You are in control of your money. Why not have your paycheck go directly to your savings account and then only transfer the amount you want to spend to your checking account rather than waiting to the end of the month to see whats left. It might make you a little more accountable to what you are actually spending.

Reduce your budgets.

I used to think I was “Saving Money” all the time after I first started using coupons, but in reality I was still spending my same food and household budgets each month, I was just simply buying more stuff with that same amount. There came a day when I decided the only way I was actually going to realize the savings was to reduce the budget. I decided that I would take a percentage (Say 10% at first) and reduce my budget by that much. Could I make it work? I wouldn’t know till I tried, but I was surprised that when  you have a limited amount you are more likely to stick to that budget than you are if the money is sitting in an envelope and you have to have the discipline to save it.

What’s Your Saving Strategy? Do you set aside your savings first? I would love to know! I’ve gotten some great ideas and suggestions from all my great readers, so let’s keep the conversation going.