Growing Your Savings

Saving money is hard. Especially when saving money means vaguely reminding yourself to spend less, so that there's more money left over at the end of the month. Goals like 'save more' and 'spend less' are only effective if there are numbers attached to them, and today I'm going to share with you a way to find these numbers.

This morning I was reading an article on the website The Everygirl, called "Easy Ways to Start Saving More Money." The article's author, Brittney Castro, points out that spending what we'd like and saving what's left over doesn't work. She suggests a new method of saving called "Pay Yourself First".

With the Pay Yourself First plan, you calculate your income after taxes, and then subtract from that the money that you pay on bills, and the money that you'd like for your savings. The money that is left over is now the money that you can spend freely, and not the money that you try —or in my case fail— to save.

So how do you decide how much to save? If you have specific goals in mind (i.e. travel to Spain in September, buy a new car in March, etc.), a site like Mint is great for helping you calculate how much you need to save a month in order to reach these goals (check out my post on Mint). If your goals are less specific and you're looking instead to simply grow your savings, Castro suggests saving 10-20% of your income. She recommends starting small and working your way up to these percentages, if at first they seem too high.

I'm currently saving up for a trip to Brazil in December, to visit a friend. Using Mint I've calculated how much money I need to be subtracting from my income each month, in order to raise enough funds for the trip. I think that I'll begin next month by taking out in cash the amount of money that I have to spend freely; that way I won't be tempted to use the card and cut into my travel savings!

Please leave comments here if you have other strategies for growing your savings, or reaching your financial goals.