{"id":317,"date":"2022-07-07T16:33:04","date_gmt":"2022-07-07T16:33:04","guid":{"rendered":"https:\/\/ludmilacpa.com\/?p=317"},"modified":"2022-07-13T13:30:38","modified_gmt":"2022-07-13T13:30:38","slug":"how-to-make-savings-a-habit","status":"publish","type":"post","link":"https:\/\/ludmilacpa.com\/how-to-make-savings-a-habit\/","title":{"rendered":"How to Make Savings a Habit"},"content":{"rendered":"\n

Tips for saving more money and watching it grow.<\/em><\/h3>\n\n\n\n
\"\"<\/figure><\/div>\n\n\n\n

Lately, it seems we\u2019re constantly bombarded with terrible news, from ongoing public health concerns to the war in Ukraine, and, of course, inflation. Fortunately, many of us saved record amounts of our income early in the pandemic, and that combined with historically low unemployment has helped us to weather this difficult economic period. But for how long? Today\u2019s economic situation certainly shines a light on the importance of savings.<\/p>\n\n\n\n

Putting money aside in savings hasn\u2019t typically been a habit many of us have cultivated. The vast majority of Americans have no savings \u2014 or at least haven\u2019t saved regularly. Now seems like the perfect time to turn our current savings trend into a long-lasting habit that helps us meet future financial challenges and savings goals, and develop peace of mind.<\/p>\n\n\n\n

How to Save<\/strong><\/p>\n\n\n\n

When I was just starting out in my career, my money was tight. I remember thinking, \u201cThere\u2019s no way I can afford to put money aside in savings \u2014 I need every dollar I get!\u201d But for most of us, this simply isn\u2019t true. A good household budget will reveal where your money is going each month, and often you\u2019ll find that you\u2019re spending more than necessary on non-essential expenses. Even putting aside $50 a paycheck can add up to more than $1,200 a year. You can decide the maximum amount you can set aside each pay period or month and work with your employer and bank to have those funds automatically deposited or transferred into your savings account regularly. When you don\u2019t actually see that money showing up in your checking account, it will be out of sight and out of mind, which allows it to grow untouched. <\/p>\n\n\n\n

Create Your Emergency Fund<\/strong><\/p>\n\n\n\n

The upside of squirreling money away these days is that we\u2019re creating an emergency fund for ourselves in the case of job losses, unforeseen medical issues, or repairs on vehicles. Even the economy stabilizes, keeping an emergency fund intact is critical. Financial guru Dave Ramsey recommends that everyone have an emergency fund of at least $1,000, and this is advice we subscribe to here at Ludmila CPA. If you don\u2019t currently have this much set aside, you should make this a top priority. <\/p>\n\n\n\n

Put anything extra after you\u2019ve done your monthly budget into a separate savings account that you can access for true <\/em>emergencies. This is not for buying clothes, taking trips, or paying bills, which are expenses you should be anticipating and budgeting for. Rather, this emergency fund is for the expenses we don\u2019t see coming \u2014 like a new tire or car repair, a busted air conditioner, or a burst pipe in your plumbing \u2014 and it should sit outside the accounts you use to pay bills. It should be fairly liquid, so not an investment, but not so easy to use that you\u2019re tempted to. Once you have an emergency fund in place, you\u2019ll enjoy peace of mind from knowing that a true emergency won\u2019t wipe you out financially.<\/p>\n\n\n\n

Then you can move to the next step: creating a safety net.<\/p>\n\n\n\n

Save 3 to 6 Months\u2019 Worth of Expenses<\/strong><\/p>\n\n\n\n

It\u2019s always a good idea to plan for the worst \u2014 a job loss, a catastrophic illness, etc. \u2014 by accumulating enough money to live on if you lose your income. With economic uncertainty expected to linger for months or even years, it\u2019s especially wise to start growing your financial safety net of three to six months\u2019 worth of household expenses. You\u2019ll find that having this amount set aside provides tremendous reassurance that you could survive a loss of income. <\/p>\n\n\n\n

Once you have this in place, put as much savings as you can into your retirement account(s).<\/p>\n\n\n\n

Where to Keep Your Savings<\/strong><\/p>\n\n\n\n

Depending on your purpose and goals, you have several types of savings accounts to choose from:<\/p>\n\n\n\n