Have you even wanted to be one of those people who always seemed like they could handle almost any financial situation life threw their way? My fiance’s dad is one of those people and I’m always impressed how he seems to have money for any situation no matter what.
This got me thinking about my own financial situation last year. I had little to no savings, and wanted to have more of a financial cushion to help cover unexpected expenses without freaking out.
It’s important to realize that the people who have lots of savings don’t just luck into the money and a lot of them aren’t self-made millionaires either. They’re regular people like you and me. Sometimes the only differentiating factor is just being an aggressive saver.
While your income may determine how much you can save, it can’t prevent you from becoming an aggressive saver if you don’t allow it to. Aggressive savers, spend less, save more, and have more financial peace and stability as a result. Here’s how you can become an aggressive saver.
Set a Savings Goal
First, you need to determine why you want to save and what you are saving for. Having a specific goal like saving up $10,000 for a car or saving up for a home or some other expense is great, but you can also save just because you want to.
Settle on a realistic savings amount and set a deadline for yourself. This will help give you guidance and remind you of your purpose for saving aggressively.
If you want to save more, you’ll need to slow down on your spending and cut some expenses out altogether. When I first started trying to save more, I started questioning almost every expense and trying to find cheaper ways to do things without sacrificing my quality of life too much.
This included shopping at the dollar store for some household goods and toiletries, accepting hand-me-downs and used clothing, and bringing my lunch to work instead of spending money on takeout food each day.
Not spending has also required some sacrifice on my end since I can’t just jump at every opportunity and have busy and expensive weekends all the time. Sometimes, my weekends consist of just relaxing in my home, watching movies, and catching up on miscellaneous tasks. It doesn’t sound like the most exciting time, but it gives me something more important; more money to keep and peace of mind.
Try to become more conscious of what you spend money on and work to cut your expenses whether they are fixed, variable, or a non-necessity.
Pay Yourself First and Automate
Paying yourself first is a must and shows that you prioritize your goal to save aggressively before anything else. Automating the process just ensures that you are consistently contributing money to your savings account and not cheating yourself.
Set up automatic withdrawals from your checking account to your savings account each time you get paid and refrain from using any of that money as best as you can.
You may want to create a cash buffer in your checking account of $200-300 to serve as a semi-emergency cash to cover smaller random expenses and prevent your account from over drafting while protecting your main savings from being used.
Grow your Money
Where you put your money is just as important as saving it. You don’t want to stash your savings under your mattress where it won’t do anything for you when you can store it in a high-yield savings account and let your money work for you instead.
Online savings accounts like Capital One 360, Ally Bank and GE Capital Bank provide some of the industry’s best rates when it comes to saving accounts. Instead of earning pennies per year at your regular bank, you can earn more money on you savings by simply placing it in an online savings account and letting it sit for a while.
Increase your Income
If you feel like you have a limited amount of money to save and you prefer to save more, you can increase your income by getting a second job, obtaining a new job, or establishing a side hustle. There are so many ways to increase your income through a side hustle along with helpful resources that help you get started immediately.
My favorite side hustles that help earn a lot of money include freelance writing and virtual assistant work but there are plenty of high paying jobs and side hustles to consider to boost your income and savings rate.
By following all of these steps, I was able to reach an aggressive savings rate of 50% of my take home income last year and you can too.
Are you trying to increase or maintain your savings rate this year? What can do to save aggressively?