Whether you’re handling your business’s capital or personal nest egg, one concept arises as evergreen in every financial conversation - saving. Preparing your finances for the future requires the proper mindset, actions and a close eye on your progress. Even though ‘America Saves Week’ concludes this week, it’s always a great time to ask yourself: Am I a smart saver?
Assess your ‘saver’ status by considering these questions.
1. DO I KNOW WHAT I'M SPENDING ON?
To find where you can keep more money, you first need to know where you’re currently putting it. Recording your expenses in real time will tell you frequency, measure and nature of your spending habits. You can then organize your purchases into categories, such as entertainment, technology, and transportation, and total them to give you a comprehensive view. Gathering this information will allow you to evaluate priorities, reallocate future funds and, ultimately, identify opportunities to save your cash.
2. DO I HAVE A BUDGET?
A fundamental part of saving money is quantifying your ideal outcome. Determining a reasonable yet impactful goal is done by developing a budget. Your budget should outline your expenses in comparison with your earnings, with the objective of limiting overspending and making way for savings. By utilizing your expense categories, you can accurately plan your purchases and detail your budget to better reflect your activity, making it easier to manage your cash. Continuing recording your expenses while referencing your thorough budget will keep you on track to your savings goal.
3. DO I KNOW MY ACCOUNT BALANCE?
Being knowledgeable about the money you have is imperative to preparing money for the future. A regular call to your business’s finance officer or logging on to your account’s online portal can provide opportunities for you to protect and accelerate your savings. At a high level, your account balance acts as a pulse check on your asset allocation. If your balance doesn’t reflect what you planned for, it is important to reevaluate your spending structure.
4. AM I PREPARED FOR EMERGENCY COSTS?
When unplanned expenses occur or your earnings fluctuate, your savings can be a source of stability and peace-of-mind. Building your “rainy day” fund can be a combination of planned contributions and unexpected earnings, such as a bonus or tax refund. Sufficient emergency funds vary in measure, but we recommend that you have at least six months of living expenses in a federally insured product, such as a savings account or a certificate of deposit (CD). While you don’t anticipate spending the money you collect for the unknown, it is critical to prepare for.
5. WHAT AM I SAVING FOR?
Beyond the goal dollar amount, having a purpose for your savings is one of the best ways to grow them. Crunching numbers is important but, ultimately, you are building your capital to help you achieve a dream. So what is that dream? Retirement, remodel, acquisition, education - your ambition may differ with each saving effort. Keeping the “dream” as part of your savings strategy will keep you focused on smart spending.
With these small considerations, you can start practicing more profitable saving habits today. Celebrate America Saves Week by identifying where you can improve to make your financial goals reality.