Do you wonder where all your money has gone at the end of the month? Are you trying save and unsure why it isn’t working? I can’t tell you how many times I’ve had the same feeling. I was able to cut my spending and increase my savings by starting with this essential first step to saving more money.
The First Step to Saving More Money
So, you’ve decided to change your ways.
You want to spend less and save more. Good! You work hard for your money, it’s yours, and you should keep as much of it as you can!
Ready? Here is the first step to saving more money….
You need a specific, measurable goal.
Isn’t my goal to save money? No! Saving money is what you’re going to do to meet your goal.
There are two parts to a specific measurable goal:
What do you want?
and
How will you know when you have enough?
What do you want?
The first thing you need to figure out is what you want to do with the money you’re going to save. WHY do you want to save more money?
Here are some examples:
- Maybe you want to buy a home.
- Maybe you want to stay at home with your kids and live on one income.
- Maybe you want to pay for your wedding.
- Maybe you want a new car.
- Maybe you want to start saving for your child’s college education.
This is very important:
It has to be something you really, really want!
For me, the turning point in changing my financial habits was when my husband and I became engaged and realized we would have to pay for a wedding. We were able to save over $25,000 in 18 months and have the wedding of our dreams.
Any financial expert would say that was a big waste of our money. They’d tell us we should have put it toward my student loan, our car loan, our mortgage, or saved it for something that would be more beneficial to our future. For some people they would be right.
But for me, saving for our wedding was the turning point. It was saving for our wedding that taught me how to save money. I’ve been able to maintain all of the habits I started during that time and I’m in a much better place financially for it. Now my husband and I are aggressively killing my student loan, and it feels good.
It doesn’t need to be a wedding, that’s just my story. You need to figure out what is important to you. Be very specific about what it is you want.
Choose only one thing.
Maybe you want a house, and a car, and retirement savings. If you start with so many goals you will lose your focus and struggle to stick with it.
Ask yourself what you would want the most if you had an extra $5000 right now.
Hint: a shopping spree is not the answer.
Really think about how you can change your life.
If you’re married, talk to your spouse. Then, sleep on it.
Once you have decided what you want the most, write it down and put it everywhere!
Type it up in your favorite font and put it on the fridge.
Write it on a post-it and put it in your wallet.
Put another post-it on your bathroom mirror and one on your nightstand.
You want to be constantly reminded of what you’re working for.
This will help to keep you motivated. Motivation is the key to success.
The next part of creating your goal:
How will you know when you have enough?
You need to figure out how you will know when you’ve reached your goal.
If your goal is to buy a car, you need to know exactly how much that will cost you.
Can’t I figure that out later? NO!
Do it right now!
There are a few reasons for this:
- You need to be able to celebrate your success along the way.
- It’s how you will know how far you’ve come and how far you still have left to go.
- When you know how much you need, you will know when you’ve reached your goal, and more importantly when you haven’t.
- Feeling like “I think I have enough” is not good enough!
How can I find out how much I need?
Do some research.
Going back to the car idea, go test drive one you love and get a quote. Being inside the car you’re excited about will definitely help motivate you. Warning: The salesperson will try to talk you into financing and convince you that you can afford it. You can’t. DO NOT BUY IT YET!
If you want to buy a home, spend some time looking on websites like Zillow or Trulia. Get a rough idea of the price range of the kind of homes you’re interested. This will vary widely depending on where you live. You can find many down payment estimator calculators online. In my experience, these calculators tend to underestimate closing costs, so round up. Add 5,000 to the calculated amount.
Once you know exactly how much you need, you can start creating your plan to achieve your goal! You can read about How to Create a Savings Schedule you can stick to and snag a free printable to help you here.
You can do it!
What are you saving for? Comment below to share your goal!
Want more? Here are some of my best posts:
Should you Loan Money to Family or Friends?
How to get a Good Deal on a Car
3 Tips to cut your Electric Bill in Half
The 2 Ways to Pay Off Debt: which one is right for you? {free printable}
You can read more about my story here: A Spender and A Saver Fall in Love
I often feel like I need to save for 3-4 major expenses. I like the idea of focusing on one. Once we meet that goal, we can move on to the next and we feel more momentum because we are accomplishing things quicker. Thanks for the post!
The concept of what I would do with an extra $5000 is clever – it really helps to narrow down momentary wants from true desires. I do love the idea of focusing on one singular goal at a time. #MerryMonday
Awesome post!!! I really need to think more deeply about what I really truly want. I do set financial goals and work hard to achieve them – but I like the perspective you have laid out here. 🙂