It’s not a secret that the pandemic caused disruptions in many aspects of human life, including money-saving habits. According to Money magazine, the country observed the lowest savings rate when the pandemic hit the economy at the start of 2020. It turned out that fewer people were saving up money for their future.
However, people are to be blamed. When many businesses closed down, millions lost their job. It became complicated more than ever to make ends meet. Whatever money people had left, they allotted it for their needs. There was no chance of putting aside money for days to come.
While not being able to save money sounds desolate enough, experts believe this is good for the economy. According to a Money magazine report, economists say that a lower savings rate means people are spending money. Vaccine rollouts apparently encouraged many to get back on their feet and spend a lot on smart TVs and remote work supplies. Added to this, the stimulus package provided by the government allowed many to have money in their pockets again.
Economists further explained that when people spend money, businesses earn, and the economy grows. Despite this, no one can contest the fact that saving money is a good personal finance habit. There are numerous benefits to it.
Saving Money Benefits You and Your Family
More than half of families in the US are living in middle-class households. With a middle-class income, families need to plan when they will make huge purchases or expenses. Cars, mortgages, and college tuition are some of the large expenses that middle-class families need to plan and save up for.
Saving money while you’re still young, on the other hand, can benefit your older days. If you’ve been practicing good money-saving techniques since you were young, chances are, you’ll have enough money to live by when you retire from the workforce.
According to Money magazine, ideally, you should save 15% of your monthly salary. If you’ve been missing this mark, you need to learn how to practice the good habit of saving money and keep it even after the pandemic is over. To help you with this, here are some tips on how you can set aside extra cash.
Start by evaluating your financial needs, apart from your regular expenses. Think about the potential large expenses that you or your family might spend on in the future. It would help you to create a list of these would-be expenses.
Once listed, you’ll need to figure out the amount of money you think you’ll need for a particular expense and how long it can take you to reach that amount. From there, divide your goals into short-term and long-term ones.
The Bank of America provided this example: for short-term goals, say one to three years, you should be able to save up for a down payment for a car, a quick vacation, and emergency funds. For long-term goals, around four years or more, you should be able to save up for your child’s education, house renovation, and retirement.
However, it would be best if you also decided which goals to prioritize. Which is important? What goal is likely to occur first? These questions can help you decide.
Understand Your Finances
Know where your money is going. Monitor your expenses and learn how to budget your money. Set aside whatever’s left. If you know how to do all of this, you’ll be able to control your expenses. If you learn how to spend your money properly, you’ll know when to cut costs and where to spend more.
Reduce Energy Costs
A simple unplugging of an unused appliance in your home can help you save money. And this is the same for all energy consumption measures such as switching to LED light bulbs, turning lights off when not in use, using cold tap water when washing clothes, and fixing leaking pipes.
In the same way, window glass repair and curtain use can help you reduce energy consumption. If your windows are broken, and there are no window embellishments, heat can escape from your home during winter, which translates to energy loss and an increase in your bills.
Maintain Your Car and Home
A regularly maintained car eliminates the need for constant repairs and the accumulated costs that come with it. On the other hand, fixing and repairing broken stuff and areas in your home can also help you save on repair costs. Waiting for issues to build up can only cause you unexpected significant expenses. If you work on them early on, you can save money that would’ve been spent on repairs.
Don’t Limit Yourself
Debt can limit you to spend and save money. However, both the Bank of America and Money magazine suggest that you first pay your debt or at least minimize it before you start saving. This will prevent you from using your saved money to pay the debt.
With all of this set, you can now start saving money for your and your family’s future.