The last element of Budgeting is Savings.
Some people consider this a tough habit to begin and keep. However, any amount you save will lead to good results in your future.
Why are Savings Important?
The act of Saving will allow you to plan and achieve many goals in life. They can be in a short or long-term perspective. Learning to save creates a good habit and financial security. Sometimes, life throws some curveballs, and your Savings can make or break your actions to solve these problems.
It’s part of human nature to be tempted by any amount of extra money in their account. Usually, if they could save some after paying all their bills, they think about rewarding themselves by buying items they don’t need. The temptation ends up diluting an excellent chance to improve your savings account. So, we need to learn best practices that will guide our future goals.
Starting Savings
The first step you need to know to start savings: You need to have a separate account. We are taught since childhood to save money with little pig banks. The concept is the same. So, open a Savings account. Then, train yourself to save at least 10% of your income every month, maybe a bit more depending on your budget. After a year, you’ll notice an improvement in your Savings account.
Goals Need Planning
Now that you’ve established your Saving routine, it’s time to set goals. After all, the primary purpose of Saving is to accomplish your dreams.
It might sound a bit cliché; however, Neuroscience research proves that those who write down their goals are more inclined to achieve them. Mark Murphy, a Management and Leadership Expert, wrote, “Study after study shows you will remember things better when you write them down. Typically, subjects for these types of studies are students taking notes in class. However, one group of researchers looked at people conducting hiring interviews.” (Source: Forbes - Neuroscience Explains Why You Need To Write Down Your Goals If You Actually Want To Achieve Them ).
Ok, so what does Neuroscience has to do with my Savings Goals?
Everything!
Write down your goals means to develop your plan for the future.
Phycology Professor Dr. Gail Mathews conducted an experiment that says you have 42% more chances to achieve your goals and dreams if you write them down. ( Source: Huffpost - The Power of Writing Down Your Goals and Dreams) You can define short (a new laptop), mid (a well-deserved vacation) or long-term (house or a new car) goals.
There are many ways to follow your progress: spreadsheets, statements from your account, a simple notebook or online tools.
Saving Planners usually do most of the work for you. Besides, they make it possible for you to keep yourself motivated, help you track your progress, remind you to contribute from time to time, among other features.
When you notice the amount growing in your Savings account, you will understand how important and why you’re saving money. Moreover, some habits, such as setting different milestones, keep the momentum and the motivation factor rising.
Remember to stay focused. “You can easily overspend and use some of the money you had earmarked for savings.” Says Miriam Caldwell in this article for The Balance, which offers some tips to guide you on your Savings path.
Fulfilling your dreams should always be your main Savings goal.
For more information and tips, check the links below:
Investopedia - Setting Financial Goals
Forbes - Defining and Achieving Financial Goals
Looking for a Budgeting Tool to assist you with your Savings? We got it!
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