When you look at your bank balance, do you see something like N2365.00 and you wish to see it improve to six or even seven digits, then, you may need to reassess your financial decisions and spending patterns. After all, oftentimes, the reasons that we don’t have enough money set aside come down to the purchasing choices we make and lacking a set personal budget. So if you want to boost your savings account and get your finances in tiptop shape, map out a concrete personal budgeting plan and focus on adopting these smart money habits. Below are smart habits to cultivate to help boost your savings account.
Keep a money diary
If you have bad money habits and want to improve them, this can be a clever way to make smarter financial choices, according to Alex Caswell, a wealth planner. “To get good habits that developed over a lifetime, it is important to take the emotional aspect out of one’s financial decisions,” Caswell says. Aside from brushing up on personal finance basics, he recommends starting a “money diary, to help one reflect on what decision they made and why.” By taking this simple step, you can start to make more rational financial choices.
Track your net worth
Knowing your net worth, the amount of money you have once you take care of all your expenses is an important step toward reaching your long-term financial goals. “This is the one number that best illustrates your whole financial situation. You can easily do it in a spreadsheet, with any number of apps or through a financial planner,” says Zach Ashburn, president of Reach Strategic Wealth, a financial planning firm in Winston-Salem, North Carolina. If you monitor your net worth, you’ll start to identify month-over-month and year-over-year trends to evaluate if it’s going up or down.
Save more
Committing to set aside a portion of your take-home pay each month is essential to building your wealth. Try saving at least 20% of your income, suggests Brent Weiss, certified financial planner and co-founder of Facet Wealth, a financial planning firm in Baltimore.
Increase this percentage by at least 1% every six or 12 months,” Weiss says. The ultimate goal, he says, should be to save at least 30% of your income. “That may not be feasible for everyone,” Weiss says, adding, “But the goal is to start saving at least some of your income.
Automate your expenses
“Automate as much as possible,” Rixse says. “Bill payments, savings goals, etc. The more you can automate, the more consistent you’ll be, and the less stress you’ll have managing it or making payments on time.” With that said, while setting up automatic transfers to your savings account is simple, you need to be conscientious of the financial needs for your lifestyle. For instance, if you’re often living paycheck to paycheck, an automated bill coming through your bank account when no money is there could trigger costly bank fees.
Avoid lifestyle creep
When you get a bonus or a raise, don’t give in to the temptation to use up all of the money on products and services that give you a more affluent lifestyle. “As your income grows, don’t raise your spending to match your income. Raise your savings first,” Rixse says. He suggests taking half of that raise and putting it into your savings and spending the other half on other things.
