Just as it’s important to know the revenues and expenses of your business, the same is true of your personal financial picture. You should know how much you’re earning each month, and what your expenses are. Prioritize your expenses into high, medium, and low buckets, and consider eliminating some of the least important expenses if you’re not saving enough money each month to meet your financial goals.
There are other tricks you can use as well. For example, if you’re paid biweekly, two months out of the year will have an extra paycheck which provides a big opportunity for savings. You can also increase the withholding amount from your taxes each month, potentially leading to bigger tax returns that you can save.
There are also “round-up” apps like Digit or Acorns that connect to your credit and debit cards and round up your expenses into a savings account. It may only be a few cents here and there but it can add up over time. While these companies do charge fees, if you’re having a hard time being disciplined enough to save, little tricks like these may be helpful.
For some people, it’s helpful to have a separate savings and checking account. You can have all the money go into the savings account, and then transfer a smaller amount to your checking account each month for your living expenses. Use that smaller amount in your checking account to budget for the month.
If this all seems overwhelming, then start smaller and with shorter-term goals. If you’ve calculated $2,500 is equivalent to your one month “rainy day fund” but it seems like a daunting amount to save based on your current spending, make your goal 5% or 10% of that a month.