Many people who have worked on Dave Ramsey’s snowball method have a hard time transitioning from paying off debt to saving. When people suddenly become debt free, they want to spend more than they’ve been used to. It feels like a huge weight off your shoulders to finally be debt free-why shouldn’t you be allowed to splurge?
But the idea of living a financially sound life is that you should always be living within your means. Just because you’re debt free, doesn’t give you free reign to start spending like crazy. It’s important to keep your finances in check–and that often isn’t as fun as spending money.
The good news is that the more responsible you are, the faster you can save and reach those savings goals, and spend your hard-earned money on things you were saving for! Does that make sense?
Here are three key tips to help you reach your savings goals fast:
Treat your savings like a bill. Perhaps you’ve heard this saying in many different ways–pay yourself first, direct deposit…any way you look at it, it’s called “force yourself to save.” By treating your savings like any other bill, you’re forced to contribute money into your savings account.
Right now, my husband and I are working on saving $30,000 for a down payment. Instead of waiting til the end of the month to see how much money we have left, we automatically transfer a set amount of money into our savings every time we get paid. By doing it this way, we are forcing ourselves to live within a smaller budget to allow our savings to go into overdrive. It would be nice if we could spend that extra money instead, but then we would never reach our goal of saving for a house.
Contribute all extra money into savings. A lot of people will come across random “extra” money and usually see it as bonus money that allows them to spend it any way they like. My husband and I are strict and treat bonus money as money that is earmarked directly for savings.
That includes everything. Did you get a $30 rebate? Savings. Tax return? Savings. Did you earmark $200 for a plumber but it only cost $140? Transfer that $60 into your savings.
I received a $50 gift card from work for a grocery store. I used the gift card and transferred that money from our grocery budget into our savings account. All these small “extra” money savings could transfer into big bucks throughout the year.
Reward yourself. While my husband and I are both committed to saving, we also still want to be able to travel and live like DINKs. So for every $10,000 savings goal we reach, we have set rewards such as a new restaurant we want to try, and a spa day for the both of us. These small rewards are great motivating tools to keep us committed to reaching those audacious saving goals.