Resolve to Save

It’s that time of year again.  People are making New Year’s resolutions, and many have already broken them.  Some resolve to quit smoking, others to lose weight, and others to save money.  So how can I make a resolution and stick to it?  The best way, get a plan.

The first step to saving is to know why you are saving.  If you are just saving because you think you should, you won’t make it very long before you will spend it all.  You have to know why you are saving.  Are you saving for retirement, a child’s education, a downpayment for a house, an emergency fund?

Once you know what the savings is going to be for, it will be easier to set the money aside and leave it alone because you have a goal and a reason for saving.  You need to think of the money as being set aside for a bill.  It isn’t there to dip into whenever you have a need, it is a bill to be paid each month.  If you think of savings as a bill, you can ensure that you set money aside in it each month and take that into account when forming a budget.

The biggest problem with savings is watching it accumulate and wanting to use it for things that it was not intended for.  This is a mental issue.  You have to consider this money already spent.  It is not there for your use, it is money that has already been spent on your child’s education, your retirement, etc.

There are many great programs available today to help with savings.  Check with your bank to see if they have a program that automatically puts the change from your debit purchases into a savings account.  This can be a great way to save without thinking about it.

I also enjoy using high yield online savings accounts as they pay a much higher interest rates than most banks.  ING Direct and HSBC are great examples.