I wrote a blog post a couple of weeks before this one about strategies to ensure your savings is working for you by getting higher interest on your cash.
One reader told me (a bit ironically) that they need help building the savings in the first place. Fair point, so here are your two options: earn more or spend less. Pretty simple, right?
I’m going to leave the ‘earning more’ piece to you - you know whether you can get a raise at work, get a second job, or build your business further to generate more profit.
But we can talk about budgeting steps and strategies! Below are some steps to take if you’re starting at square one. Be sure to read next week’s post for some information on different budgeting strategies, so you can choose the strategy that works best for you.
Step One: Establish Your Goal
How much cash do you need or want to have set aside? If it’s for an emergency fund, 3-6 months of expenses is kind of the rule of thumb (you can read my blog post about emergency funds here). But maybe you’re saving for a larger purchase, like a down payment on a house or a big vacation. Regardless, step one is figuring out your target - directions have little value without a destination.
Step Two: Track Your Spending
How can you determine what you need to cut back on if you don’t know where your money is going in the first place? Honestly, whether you’re budgeting or not, I think that tracking your spending is something everyone should do. Knowing how much you spend each month makes every part of planning so much easier. For more information on tracking your spending, check out my post on it here. Hint: Tracking your spending can be as easy as looking at the past few months of bank and credit card statements.
Step Three: Determine Your Strategy (and Implement!)
Once you know what you’re spending, you can start to figure out how much you could cut back your spending and in which categories, and you can start to think about automating your savings. There are a number of different strategies for budgeting, and like everything else in finance, different strategies suit different people. Check out next week’s post for more information on proven budgeting strategies.
Conclusion
As with everything else - the hardest part is getting started. Take this next week and work yourself through steps one and two, then come back next week to choose which budgeting strategy to implement!
As always, keep in mind that you don't have to go it alone. Check out my website to see what it's like to work with me and reach out if you have any questions.
If you found this post helpful, help spread the word! Share with friends and family that you think may benefit as well. But remember, this is solely for educational purposes - it's not advice.
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