Despite being aware of how critical it is to save, many people just aren’t doing it. Many of us have debts and other bills that eat up so much of our income that we simply just don’t have very much available to save. And with personal finance experts constantly crowing about putting away ten to twenty percent of our pay every month, it might not seem worthwhile to bother with saving the small amounts many of us find ourselves left with at the end of the month.
Unfortunately, this attitude about saving – it’s not worth it if we don’t have hundreds of dollars to put away every month – couldn’t be further from the truth. In fact, just a “measly” $100 can go a long way towards boosting our level of financial security. Take a look at the information below for tips about how to manage the money you’ve allocated for savings, even if it’s just a hundred bucks:
First, start working on an emergency fund
The first and probably most obvious way to boost your level of fiscal fitness is to establish a basic emergency fund. An emergency fund can go a long way to protect you from life’s unforeseen expenses, so this is a good place to start funneling your $100 towards.
Keep putting your $100 into your emergency fund until you have a few months of expenses saved up. The exact amount of your emergency fund is highly dependent on your personal circumstances, but concentrating on having 2-3 months worth of expenses in savings is a good place to start. Once you’ve hit that mark, it’s time to start thinking about saving for other stuff.
Then, take a look at retirement savings
Again, don’t be put off by the seeming insignificance of $100 per month when it comes to saving for retirement – the magic of compound interest will see to it that that meager sum grows over time.
Once you have a few months of living expenses in the bank, it’s time to think about how you’d like to start saving for your old age. If you company offers a 401(k) or 403(b) program, you can have your $100 automatically deducted from your paycheck every month. If these types of accounts aren’t available to you, look into opening an individual retirement (IRA) – again, the $100 can be auto-drafted from your account every month. However you choose to go about it, that $100 is a great place to start providing for your future security.
Finally, work towards other goals
Once you’re comfortable with the amount you have put aside for emergencies and the amount you’ve allocated for retirement savings, it’s time to think about other goals. Do you want to buy a house or a new car? What about a vacation or a new computer? Once again, small amounts of cash add up. Perhaps you could split your $100 per month between retirement savings and saving for a big, future goal, or slice the sum 3 ways between emergency fund, retirement, and other goals. These choices are up to you, but the important thing is not to give up on a dream because you feel you’ll never have the cash to make it happen. Stay dedicated with your savings and you’ll get there!
In truth, no amount of money is too small to save – if you get started right away, even tiny amounts of cash can make a big difference to your fiscal future. So don’t delay, make a plan for your savings today!