As you review your budget and your net worth, you may decide you need to save more money.  Saving money sometimes seems tough, but it can be done if you have a plan.  Many people don't have a formal savings plan-and without one, the chances of saving enough money to meet long-term financial goals or achieve financial security are very slim. Instead of waiting until you have "extra" cash to save, create a plan for savings. Having a budget will help you create money for savings. By setting spending goals, most people find they can save regularly.    

In the beginning, the amount is less important than the fact of saving regularly. If you look at the amount you decide to save each week or month as an obligation, such as a debt payment, the idea of "paying yourself first" can become a serious commitment. Begin with an amount that you are sure you can set aside so that you build a sense of accomplishment rather than frustration.

Tips for Saving Money

• Distinguish between wants and needs. You will save money if you distinguish between needs and wants.  Needs are items that are necessary to sustain you such as shelter, food, clothing, and transportation.  Wants are things that enhance or possibly improve our family life.  Shoes are a need, but new shoes every month are a want.
  
• Set realistic, achievable savings goals.  Experts suggest you save 10 percent of your income.  It's a good goal, but don't give up just because you can't save that much. Establishing a savings habit and saving consistently is better than putting aside a big sum just once. Start with an amount you know you can save consistently.
  
• Set up a separate savings account using automatic deposit. If you mingle your savings with your regular checking account, you'll almost certainly dip into your savings and may never pay them back.  If possible, have your employer or your spouse's employer deduct a set amount from your paycheck each pay period and deposit it into your savings account automatically. 
  
• Decrease dependency on debt.  Decreasing debt is an effective way to free up more money for saving. When you decrease dependency on debt, you will probably begin purchasing less and your total debt will begin to shrink.
  
• Commit savings goals to writing.  Writing down your savings goals can have a powerful impact on changing your behavior.  It makes your goals more real and concrete.  Write down your short-, medium-, and long-term goals along with your projected timeframe to achieve them. Make sure the goals are doable and realistic and review them regularly.
  
• Develop a budget that includes savings. Include monthly savings into your budget. If you do not budget for savings, you probably will not save. Establish savings for emergencies as well as for short - and long-term goals.

Next: Points to Remember
Back: Budgeting is as Easy as 1-2-3