Lesson 4: How to Save
With saving, you might feel like your money’s already stretched too thin to put away. There’s a car to pay off, utilities to cover, and rent to take care of. But sometimes all you need is that first step in the right direction to get yourself going.
Here at OppU, we want you to know that everyone can get to a point where they can save.
So how do you begin? In this lesson we’ll teach you to free up money and create a savings fund. You’ll learn a trick called “pay yourself first,” and how to set and hold yourself to financial goals.
To begin with, let’s find some money to save, so go ahead and look at your last month of expenses. How often did you go out to eat? Did you pay for coffee instead of make it at home? So like you did before, separate your wants from needs, and look for places to cut. Every dollar you take from your “want” purchases, is a dollar you can put toward your savings fund.
With all the money you free up, you’ll want to create a new category of expense in your budget, but this time, instead of paying other people, you’re going to give that money to yourself in a trick called “pay yourself first.”
Most people save by seeing what they have left over at the end of the month and putting that away. But with pay yourself first, your money goes directly into savings. So think of it as a necessity, kind of like paying your landlord or the gas company. A good goal is to set aside 20 percent of your income, but if you can’t do that, choose an amount and stick to it, no matter how little it might be.
With pay yourself first, you’ll see your savings climb. The next step is to decide what you want to do with your money by setting goals, and this is where things get fun. Some goals are important for financial health, like saving to pay off debt. But don’t limit yourself. Have you ever dreamed of traveling? Maybe set aside some money for a trip too.
We all have different goals, so take a minute to think about yours. Think about short-term goals, like saving for a big purchase, but consider long-term ones too, like retirement, or buying a home. Decide what you want to save for, and then make it happen.
Many people see saving as a sacrifice, but saving just means that you choose not to spend today in order to buy something in the future. And how happy does something like an impulse lunch at a restaurant really make you? Wouldn’t that money be better spent by putting it toward a great vacation with a loved one?
So start saving now, and look forward to enjoying the benefits later.