Saving can be difficult, especially in the beginning.
Though saving your first $1000 can be a challenge, but once you’ve managed it, where do you go? First, invest your extra cash and place your money into savings pots.
Putting money aside is a challenging task, especially if you are on a budget, have just got your first job, or do not know where to start.
There are many tips and tricks that you can use to save your first bit of money, say $1,000, but once you have this safety net, it is time to understand your savings completely.
How do you make the most of your savings, ensuring that you’re saving money correctly and putting it in the right places?
This article will tell you some of the best ways to continue to grow your savings to make sure that you are getting the most out of your money, offering options to suit everyone. Keep reading to find out how to make the most of your savings.
Keep the momentum going
Once you have saved your first $1000, the key is consistency. You should aim to keep saving $1,000 as often as you can, for example, every month if this is feasible given your income and necessary expenses.
The best way to do this is to keep a close eye on your money and know exactly what you have going in and out. This will prevent any unpleasant surprises at the end of the month.
You can do this one of two ways: digitally or physically, i.e., by tracking all of your cash flow in spreadsheets or by using only cash.
A cash diet
One of the main reasons people tend to overspend is that they do not think their money is accurate, more like monopoly money, because they can’t see it.
This is one of the main reasons why using cash can be a convenient tool for saving money. Go through your income and work out a reasonable budget for the week or month, whichever time frame works best for you.
Then, withdraw this amount in cash. If you need to budget for many different things, e.g., food shopping, children’s hobbies, gas money, etc., consider buying an organizer such as a plastic wallet to help make this easier.
That way, when you go to do your next grocery shop or go out to buy clothes, you will see the money depleting physically, which will cause you to reassess your purchases. Is it necessary? Can you get it cheaper somewhere else?
A big plus of this method is that if you can cut costs in certain areas, e.g., by shopping at a different grocery store, you will be able to see the rewards of your efforts!
Of course, any money you save should either be deposited back into your bank into a savings account or kept separately as cash. However, the former is the safer option and will not be added to the next budget as spending money.
A digital record
If you prefer not to work in cash, you should keep a close eye on your spending. Set yourself a realistic budget and keep a record of everything that you spend. Any money that is not spent should be put into the savings account.
Remember that you should also allocate part of your budget to your savings. I.e., you should allocate money for our necessary expenses (house payments, car payments, food, etc.) and then designate a certain amount of money for savings.
Putting this little bit of money aside before any extra savings will help to keep you on a roll.
Build other safety nets
One of the main reasons savings get depleted is the unexpected in life. For example, your roof might get a leak, your car could break down, or someone needs to go to the hospital. None of these things can be predicted, but they can be rather pricey.
So, after saving your first $1,000, you should aim to think about the areas in your life where certain costs may arise. Then, once you have identified these areas, decide how much money you would like to set aside for an emergency in these areas.
For example, you may have an old car that is prone to breaking down and needing repairs. You may decide that this warrants $1000 in savings. It would help to start putting money into these pots every month to build them up slowly.
Once you have hit your targets, you can rest easy, knowing that you will not likely need to dip into your savings if a disaster does happen.
Decide what you are saving for
One of the hardest things about saving is that often our goals are big and very far in the future. For example, if you are saving to buy a house.
To keep yourself on the right track, you should break your big goal down into smaller ones. For example, you can hit a particular savings milestone by a specific date. This will help make your goal seem more natural and will also help you stick to your path.
If you know that future expenses will be costly, such as your children going to college, then start saving early. By doing this, you will not need to worry about the expenses when the time comes.
You do not need to start saving a ton of money, but by adding a little to this pot every month, it will grow steadily into a decent sum of money over time.
Invest your money
One of the best ways to make the most of your savings is to invest your money. However, you should understand that investing your money does not necessarily guarantee an increase, but it risks losing money.
There are different ways to invest your money, which have different risks. For example, often, people think of the stock market when it comes to investing, and yes, this can be a suitable method, but if you do not know what you are doing, it can be a precarious place.
If you want to invest in the stock market, you will either need to do the proper research or hire the services of a financial adviser or broker to help you and give you advice.
Other options that are often overlooked are savings accounts and other bank accounts. Although these typically offer smaller returns than investing in the stock market, they are a much safer option and better for short-term investments.
For example, if you will need your invested money within the next five years, this is the better option for you, as the stock market should primarily be seen as a long-term option.
Bonds are also an excellent and safe option. It would help if you always did the proper research to determine which method of investing suits your needs, lifestyle, and budget.
Sort out your debts
If you have any debt, be it student debt, credit card debt, etc., this should be your first port of call as the interest fees often mean you are wasting money for no reason. Therefore, the quicker you can pay off these loans, the better.
If you have several types of debt or debt with different lenders, consider contacting a financial advisor or bank employee. They will offer you advice about the best course of action going forward.
In some cases, this may mean paying one loan off entirely before turning to the others; for others, it may involve consolidating their loans. Each case is different.
There are many ways to continue saving after your first $1000. You will need to look at your circumstances to work out the best action for you.
This could involve sorting out your debts, reevaluating your expenses and cutting back to save more, setting yourself a budget, or simply setting up several savings accounts for different goals and time frames according to your lifestyle.