New To Saving Money? 5 Frequently Asked Questions
New to saving money? Perhaps you read my last article on how to take the stress out of handling money, and are committed to the process of adding some savings to your financial strategy. If you are new to saving money, but don’t know where to begin, here are the answers to the five common questions about saving money.
1. How often should I put money in to savings?
You should be saving money each month. Work this in to your monthly budget. I always recommend calculating what you need to save for and how much should be saved each month. Once you have determined the amount, place this as a line item in your budget before you factor in “fun items” in your budget like entertainment or eating out.
Save a little for the future now, and you will be glad you did when you need it later!
2. What should I be saving for?
You can literally save for anything–I mean it! My husband and I have bought two cars in cash, and both were very large purchases. You can save for family vacations, holidays and gifts, having a baby, adoption, even buying a house!
Below is a list of things I often see people save for and work in to their monthly budget for savings:
- Family vacations or trips home
- Vehicles (automobiles, ATVs, boats, anything with a motor and wheels really)
- Electronics such as cell phones, computers, laptops, cameras, etc.
- Concerts, games, sporting events, and more
- Expensive clothing, handbags, shoes, makeup, salon and spa days
These are just a few examples of things you can and should be saving for if you cannot simply factor the one-time purchase into your monthly budget.
3. How much should I save for an emergency?
If you are in the process of getting out of debt, I recommend having a small, starter emergency fund of $1,000 to $1,500 for an emergency. Then, any disposable income you have should go directly toward getting out of debt and clearing up that additional income for you to build the fully-funded emergency fund.
Once you are out of debt, you should save 3-6 months of expenses (not the actual amount of income you have), or whatever makes you and your family feel comfortable. My husband and I can live on almost nothing, so we feel comfortable with an emergency fund of about $8,000 to $10,000.
This is an appropriate amount for our family because we are completely out of debt, which means we do not have any payments of any kind. This amount of money will help feed us and meet our basic needs in the event of an emergency. If your family feels you need to operate on more or less, do what works for you.
4. How do I save for large-ticket items?
If you know you have a big expense coming up (for us in the Great North, it’s almost always tires), you should allocate a certain amount of money each month toward saving for that expense.
With the example of tires, if a new set of 4 tires will cost approximately $600, I can find a way to save $100 per month for six months to pay for the tires. This way, you will not accumulate debt, and you will be ready for the expense when it comes.
5. Who should be included in this process?
Just like with the budget, if you are married, you and your spouse need to create the your savings plan together. I’m talking, sit down, pour a cup of coffee and go over what you both would like to save for. Each of you should have a say on where the money should be allocated even if only one spouse is working.
Remember when you are married, money is a we thing, NOT a me-thing.
If you are single, I highly recommend getting an accountability partner to keep you on track with your money. I would always have a trusted friend or family member I would go to and share my financial goals with them. Then, if I had trouble determining how much I should save up for in a large purchase, I would turn to them for help and guidance, and they would help keep me on track and accountable to my spending and saving too.
Final Thoughts
The concept of saving money is not a difficult one. Put away money now, so you can use the accumulation of that saved money for a larger purchase later.
What makes saving money so difficult is not the concept, but rather the behavior. If saving money is a new practice to you–way to go! Just taking the first step toward saving is a huge accomplishment. Like any other aspect of life (think physical fitness, relationships, academic learning, etc), saving takes discipline and practice.
If you find that saving money is challenging–you are not alone. Give yourself some grace. Celebrate the wins. Forgive yourself when you come short. As with any financial milestone, it takes time and effort. You can do this!
