Saving money is hard. You always have something better to spend your money on. Next thing you know, you find yourself at the end of another month with no savings to show for it.
If you want to turn things around, you should treat your savings like one of the bills you prioritize each month. Making your contributions a monthly habit with a due date can help you establish your finances and reduce stress.
1. You’ll Pay it First Thing
Treating your savings like a bill forces you to think about your finances in a different way. Savings can no longer be something you make out of the leftovers after paying bills and splurging on fun things. It joins the ranks of necessities that you need to deal with at the start of each month.
When you think of your savings like a bill, it becomes like rent, utilities, or insurance payments. Like paying rent, you’ll pay into savings before you pay for Amazon Prime or order takeout.
Your spending habits will have to change when you reserve a portion of your paycheck. After all, you’ll have less money to spend on wants — which may take some getting used to — but on the plus side, you won’t put off saving until it’s too late.
2. You’ll Be Prepared for the Unexpected
One of the many reasons people save money is so that they have an emergency fund. This savings account can help you take on unexpected expenses you don’t think to budget for in advance — infrequent things like calling a locksmith after you lock yourself out or paying a roofer to patch a leak in your roof.
Living without an emergency fund can be challenging. It means you only have the expendable cash leftover in your budget to put towards these unusual expenses. If the leftovers aren’t enough, you may have to put emergency repairs on a line of credit.
You might already have a line of credit open, so you can borrow when you need it in an emergency. But a line of credit is like any personal loan — it should provide backup to your savings; it shouldn’t be the only way you handle the unexpected.
When you treat savings like a bill, you’ll contribute to your emergency fund every month. This monthly contribution will add up — even if it’s just $10 to start. Eventually, you’ll accumulate enough cash to cover most emergencies without a line of credit.
3. You’ll Prioritize Long-Term Goals
Once you get used to saving every month for emergencies, you can start thinking about your long-term future. Do you want to buy a house someday? What about retirement?
These long-term goals are easier to achieve when you sock away a little cash each month. Like your emergency fund, these savings will grow over time.
When it comes to big financial steps, like retirement, you’ll want to transfer your savings to a registered fund. Talk to your employer to see if they’re willing to match your monthly contributions with an employer-sponsored retirement plan.
Saving is Easier When it’s a Non-Negotiable Commitment
If you haven’t managed to save much money, pretend it’s a bill you have to pay on the first of every month. This subtle change in perspective can help you prioritize savings, be prepared for the unexpected, and achieve life goals.