So, you got a job, rented an apartment, bought a car (or mastered the public transportation system), paid the bills … and you’re now realizing that after all that, there’s not much money left. Finding the inspiration and motivation to save can be really hard — even when you know it’s important.
To get inspired, think about what you want for both today and in the future. Check out these “savings buckets” to help you identify your goals and find motivation to save!
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Bucket #1: Save for the future.
Starting to save before you have dependent kids or parents can really help build up your account. You can start saving for things like an emergency fund, a down payment on a house, retirement, or your children’s education. Even though these things are far in the future, putting away a small portion of your paycheck for them means less to stress about later.
Consider this: saving $150 a month starting when you’re 25 will add up to $45,000 by the time you reach age 50. If you started saving just 10 years later at age 35, you’d have to save $100 more every month (that’s $1,200 more a year) just to reach the same goal.
Bucket #2: Save for the unexpected.
The unexpected happens. Just take a look back at your last year and name the expenses that popped up that you didn’t necessarily plan for. It’s important to have money set aside to cover things like car trouble, medical bills, a broken phone or computer, or a job loss. We recommend saving at least $1,000 in an emergency fund to start.
Bucket #3: Save for the fun stuff.
You’ll also want to have some money set aside for the fun things in life too. Maybe you’ll be able to attend your friend’s destination wedding or be able to buy a car that actually has air conditioning.
Now I’m sure you’re thinking: “That’s inspiring and all, but there’s no way I’ll actually be able to save that much.”
It can seem daunting. Saving for the future, emergencies, and the fun stuff while still meeting all your needs for today can be a lot to handle. But it doesn’t have to be so intimidating! Starting with whatever you can is better than nothing.
You can also follow the tips below to help you rack up your savings faster:
1. Live like you’re in college.
What I mean by this is that your college self penny-pinched on everything. When the bread was gone, you were fine with eating the peanut butter straight out of the jar and calling it lunch. When all the plates went missing, Frisbees were an acceptable substitute.
Now, you don’t need to go to those extremes (and probably shouldn’t), but you get the idea. Just because you have a steady paycheck now doesn’t mean you shouldn’t still be a little thrifty. Opt for the generic brands every once in a while or stick to coffee from home instead of from a coffee-shop. Put the money you save from living life more frugally into your savings. It’ll add up.
2. Protect your paycheck.
It’s time to consider health, disability, and life insurance. All three are important to have (and one is required), especially now that you’re an “adult.” Your employer might even offer one, two, or all three types of insurance.
Think of it as part of your regular monthly savings. Preparing for the unexpected with disability insurance, like an injury that leaves you unable to work for a period of time, could save you A LOT of money if it happens. If you’re married or have children, getting life insurance is a smart move and will protect your family in the case something happens to you.
Depending on what your employer offers, you may need to fill in the gaps to make sure you have enough coverage to keep you afloat during difficult times. Most employers only offer coverage for 1 – 2 times your income, when if fact it’s recommended you have at least 3 – 6 times your income. Check your current policies to see if an individual insurance policy is right for you.
3. Hit your milestones.
Set some goals for yourself, like reaching $1,000 in savings, then three months’ income saved, then six months. Having a goal in mind will keep you from using your savings unnecessarily. Then when you do reach those marks, you can reward yourself a little. Go ahead, buy the large chocolate ice cream in a waffle cone, you deserve it!
You can also find a savings rewards program that will pay you for saving. The Emergency Savings Share Account from Thrivent Federal Credit Union allows you to earn up to $100 in savings rewards for hitting certain milestones. Check it out.