Around this time of year many people start to make resolutions – things they want to start doing, or stop doing, to improve their life. It is not uncommon for saving and investing more to be in people’s top five resolutions.
Not sure what your new year’s money resolutions should be? Here are some ideas.
Commit to paying yourself first
When you get your paycheck, many people often spend first, and then save what is left over. The problem with this is that it doesn’t guarantee any regular savings; your savings could become dependent on how much you spend each month (and often in a rather unplanned fashion).
In 2021, strategically pay yourself first by setting aside a fixed percentage of your income towards saving and investing (for example the 20% from the numbers above), and then spending with what is left over.
Automation is your friend if this is your resolution, which can whisk the money straight out of your spending account before you have a chance to spend it. Setting up a recurring deposit into your Raiz account is one way to do this.
Create (and stick to) a budget
The problem with most budgets is we often become disengaged with them, leading us to stray from their guidelines. A simple 50/30/20 budget can be a good place to start with budgeting, since they are relatively straightforward and easy to follow.
It’s simple in principle and in practice:
- Use up to 50% of your income for what you need
- Allow for up to 30% to spend on the fun stuff
- Save 20% for a rainy day, investing or your savings goal (like buying a house).
These numbers aren’t necessarily fixed; however, they provide a strong foundation for building healthy financial habits to help you achieve your goals.
Choose a savings goal and start working towards it
The previous tips are good behavioural changes to help you start managing your money better and saving more, however it’s also good to have a goal to work towards. Some common savings goals your could consider are:
- Build an emergency fund – 2020 has shown us why having one of these can be so important.
- Save for a holiday – We all need one after 2020, fingers crossed more travel locations become available in 2021.
- Save for a house deposit – Buying a house is a big financial life decision. If you’re planning to buy in the future, the best time to start saving is now.
- Pay down any debt you have – It’s simple, debt is not your friend if you’re trying to save.
- Save for retirement – If you don’t have any immediate money goals that come to mine, it’s generally a good idea to continue building up your retirement savings.
Challenge yourself to save $1000 in a year
$1000 sounds like a lot, but over the course of a year this actually isn’t too difficult to achieve. We all like a challenge to get fit or lose weight or to meet another goal. Saving and investing is no different. If you save just $20 per week, you’ll put away $1040 in a year. If you have not already set up a recurring deposit or savings goal with Raiz, then setting one up and investing $20 weekly into your Raiz account could help you achieve this.
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