Takeaways
- Smart money savings habits help you develop a healthy relationship with money.
- Streamlining your finances to invest and grow your money leads to success.
- Automating your financial ecosystem will remove the burden of decision fatigue.
- Smart money habits accrue exponentially and help you reach your goals faster.
- Paying yourself first is one of the easiest ways to start forming a productive saving habit.
Everyone feels better with more cash in their pocket, but saving isn’t easy. Saving competes with all your monthly expenses to jockey for first place. And let’s be honest, sometimes spending can be more fun than saving. But the reality is that savings habits separate the financially prepared from everyone else.
Building smart money savings habits into your financial routine will help you achieve your financial goals and increase your happiness. By constructing saving mechanisms into your financial ecosystem, you can remove the decision fatigue about when, where, and how much to save.
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Quontic High Yield Savings Account
Smart Money Rating: 5/5
APY: 4.50%
Required Minimum Balance: $100
5 Smart Money Saving Habits
Here are five smart money habits that will help you start piling up cash:
1. Pay Yourself First
Most people adopt the exact opposite strategy of paying yourself first. Instead, after paying all the bills at the end of the month, you attempt to save some portion of what is left over. That is not a winning strategy.
Instead, it’s time to look out for yourself first. Instead of paying all your other expenses – credit card bills, utilities, rent– you now sit at the top of your financial payment pyramid.
By paying yourself first, you reward yourself for all your hard work by putting cash into a savings account to boost your emergency fund, slush fund, or investments. Paying yourself first is a forcing mechanism that virtually guarantees you will head in the right financial direction.
After achieving your financial goals, you can move on to everything else with a claim on your monthly expenses. Creating a budget will help you keep track of your expenses and reduce your costs to meet your savings goals.
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Alliant Credit Union CD
Smart Money Rating: 5/5
APY: 5.10 % (Terms Apply)
Required Minimum Balance: $1,000
2. Automate Your Savings
Once you have started paying yourself first, the next step is to automate your savings process. By automating your financial ecosystem, you can remove decision fatigue from your financial life.
Creating financial goals should be done once or twice a year. After your goals have been set, you should create a financial structure that automatically pays bills and moves money into your savings and investment accounts. This process only needs to be set up once. You can set it and forget it.
Maintaining your automated financial ecosystem requires almost no work and gives you the mental freedom to think about doing things you love instead. Also, adjusting your financial ecosystem to meet new goals only takes minutes once you have set up your infrastructure.
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Quicken App
Smart Money Rating: 5/5
Best For: Tracking Personal Finances
Bonus Offer: 50% Off for New Customers (Terms Apply)
3. Invest Your Money
Investing in stocks, bonds, real estate, and other assets is a fantastic way to grow your net worth. Instead of saving your cash all the time, you can put your money to work and let your dollars do the heavy lifting.
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By thinking of all your dollars as little workers striving to increase your net worth, you can begin to understand that you want them working day and night to help you reach your financial goals. Put your money to work to boost your savings journey.
Getting started investing can be the hardest part. Setting up one of the best online stock brokerage accounts takes a few minutes. And by incorporating your investment accounts into your automated financial ecosystem, you can make the process seamless.
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Acorns Website
Acorns Investing App
Smart Money Rating: 5/5
Intro Offer: $20 Bonus Investment
Best For: Beginner Investors
Annual Fee: N/A
4. Create Financial Goals
Financial goals serve as the foundation of your ecosystem. By creating financial goals that align with what you want to achieve over the short and long term, you have a financial north star. This alignment will allow you to hone your money habits and help you reach your financial goals quickly.
By creating SMART financial goals, you can be highly specific about what you want to achieve, measure your progress consistently, determine attainable goals, ensure your money goals are relevant to your overall life goals, and create a timeframe to achieve your goals. For example, you might determine you should save a $3,000 emergency fund in a high-yield savings account within six months.
Save time and money by avoiding the Top 12 Most Common Financial Mistakes.
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Consumer Credit Union CD
Smart Money Rating: 5/5
APY: 5.00% on 13 month Certificate (Terms Apply)
Required Minimum: $250
5. Stick To Your Budget
One of the biggest considerations when determining where to spend your money is dividing your needs versus your wants. This means bifurcating essential expenses with excessive spending. You make this decision when you create your budget and analyze your fixed and variable costs. Maximizing your dollars for your needs will allow you to allocate more cash for your savings goals.
Your monthly budget should directly align with your financial goals and accelerate your financial plans. Creating a budget, such as a 50/30/20 budget, will provide you with monthly accountability and allow you to course-correct if necessary. Your budget will also serve as a benchmark of progress.
Plug and Play: 50/30/20 Budget Calculator
Smart Summary
Money habits are the foundation of your relationship with money. By incorporating smart money-saving habits and tactics early in your life, you can build up a savings and investment portfolio that can produce passive income and easily carry you through retirement. Smart money-saving habits form the foundation of a terrific understanding of how money can help you do more of what you love in life.
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