2. Save $1,000

Do your best to save $1,000 and build a little nest egg before doing anything else.

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Reasons

 

Build a nest egg before paying off debt

• When paying off credit card debt, it can seem like all of your cash goes to paying off the balance and then you are left with zero cash for other expenses.

• This can lead to you having to re-used your credit cards and essentially "undoing" your progress on debt repayment.

• By building a nest egg, you'll have cash to fall back on when you start to pay off your debt, which will provide some breathing room.

 

Create a good habit of saving money

• Some people were never taught how to save money or, to be frank, are just not that good at it. But that's okay.

• Learn how to save money by shooting for a reasonable amount to provide to yourself you are capable of doing it.

• It's okay if this number isn't $1,000 at first - work towards the first $100, then $200, and so on.

• The goal here is to KEEP this amount in savings at the end of the month, not just leave it in your checking account to be used whenever you want (it's called saving for a reason).

 

Tips

Open up a separate savings account

• If you have trouble saving because the money is burning a hole in your pocket, then open a separate savings account that you don't have readily have access to.

• Open up this account at a different financial institution and don’t download the app or look at the statements online. Transfer the money out and forget about it.

 

Create a budget

• I have plenty of resources and videos about creating a budget, but here are some highlights.

• Know what you take home and know what you spend -> this will allow you to set a monthly target for yourself that is reasonable and attainable.

• For example, if you bring home $5,000 per month and you spend $4,500, then your monthly savings goal physically cannot be $1,000 per month. 

• But you won't know this unless you go through a budget.

• Additionally, the budget exercise can provide insight into what you're spending your money on and provide potential opportunities to decrease your spending on things you don't need.

• If you are able to eliminate some non-essential expenses, then you can look to increase your savings target.

• I can help you with this so please don't feel overwhelmed.

 

Find a purpose bigger than yourself

• This one is purely psychological and may not be for everyone, but if all else fails, do it for someone else.

• From my own personal experience, I am more motivated to save for my family then I am for myself - find a person (or people) in your life that motivates you to be better and do it for them.

• Save for something specific first. The ultimate goal is to keep this money in savings, but it could be motivating to save for something to get yourself going and then reward yourself for accomplishing this goal.

• Save for a fancy dinner or a new pair of shoes. It doesn't (and probably shouldn't) be too extravagant and too lofty that it takes you a long time. But something quick and attainable. Show yourself that you can save.

 

Get competitive

• Find someone with similar goals and compete against them to try and save. 

• I find that competitive people hate losing more than they like winning - use this to your advantage to save money.

• A competition will also create transparency and accountability - you'll have to physically show your competitors the amount you saved and kept, so there is no lying here.

 

Get a financial coach

• No, this is not an advertisement to use my services.

• But having a financial coach to keep you accountable (much like a personal trainer) may help get you towards your goal faster.

• An add-on bonus here is the motivation of seeing someone who has already accomplished your goals so it may push you to work harder towards this.

• CAVEAT -> This tip is irrelevant if you have to pay someone a lot of money and it hurts your budget, so try to find someone willing to do it for free (I'd be happy to do it) or at least at an affordable rate that you feel comfortable with. And stay off social media, most of those "gurus" are clickbait monsters and aren't practical.

 

Types of Accounts

• Checking Account -> This is your typical bank account where your everyday spending money should be. 

• Savings Account -> This account should be used to "save" your money, meaning you don't use these funds unless absolutely necessary.

• High-Yield Savings -> This is a type of savings account that earns you more interest on your money. It will allow your money to grow faster than a traditional Savings Account would.

• Money Market Accounts -> These accounts are a cross between checking and savings accounts, and typically offer higher interest rates than savings accounts. These are typically offered through an investment account.

• Certificates of Deposit -> These accounts are a type of savings account with a fixed interest rate and term, and usually have higher interest rates than regular savings accounts. Withdrawing money early may result in an interest penalty.

• Treasury Bills -> Also known as T-Bills, is a short-term debt obligation backed by the U.S. Department of the Treasury with a one-year maturity or less. This is not a traditional account and is not for the average person.