6 Steps to Increase Your Savings

by TTMK on May 15, 2012 · 2 comments

Growing your nest egg doesn’t have to be complicated. I’m not saying it’s easy, as I know full well how hard it can be to make money and save it.  That being said, it seems as if some basic principles, if followed with discipline, can help somebody increase their accumulation of money.

Here are 6 steps to increasing savings and growing your nest egg:

  1. Protect and grow your income stream.  I suspect that many people focus on savings, or might take for granted that they will have income forever. Well, it doesn’t work that way, and it’s not automatic. We can’t save money if we don’t have any money to be saved in the first place! Thus, it’s important to focus on one’s career, business, or whatever sources of income there are.
  2. Understand the difference between wants and needs.  Okay, so once you have income, you have to decide how to spend it, right? This is where it’s important to be able to distinguish between what you want and what you need. That dream sports car? It’s something you want. Do you need it? No, you could do just fine with a high quality used Toyota!
  3. Budget to have expenses less than income.  This might entail some planning on your part, but it’s important to take some time to assess your expenses and determine how to make such a budget work.
  4. Prepare for the unexpected.  Sometimes, things can happen to us. Job loss, health issues, divorce, accidents, or bad luck can find their way into the lives of people everywhere.  Now, it’s tough to prepare for everything and there are some we just don’t want to plan for. However, the odds are that some negative things do happen to many people.  Save accordingly.
  5. Track Expenses.  By documenting and recording your expenses, you can take the guesswork out of where your money is going.  You’ll be able to figure out where any problems may be creeping up, and how you can adjust spending to meet your savings goals.
  6. Set goals.  By setting savings goals, which can be a part of long-term financial and life goals, we can have a target to aim for.  This can really get us going in the right direction, thinking about how reaching certain savings goals will help us in the big picture.

Taken together, these steps can help set the foundation for the long quest for financial freedom!

What do you think?

Do you follow any of these steps? Which ones?

What other suggestions do you have for people to increase their savings?

 

{ 2 comments… read them below or add one }

Mike May 24, 2012 at 6:08 pm

Lots of good points and really like the one about wants versus needs. When it comes to transportation my wife and I realize we NEED to get to work, but we WANTED a Dodge Charger. We realized that would have just been a bad financial decision.

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TTMK May 30, 2012 at 11:34 pm

Mike – yes, needs and wants are good things to be able to differentiate!

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