Saving money is easy (well, easier) if you begin with the end in mind – in other words, have a goal.
Once you have developed an understanding of where your money is going each week you can begin to think about how you might like to change your spending habits. Setting goals involves deciding whether or not you would like to save money for some future use. That future use could be to pay for an education, a vacation, a car, or a house. Which of those items you are planning to save for will influence how much money you need to save and how long it will take you to reach your savings goal.
It is important that your goal be realistic, lest you get frustrated and give up. For instance, if you earn $20 an hour and want to save up to buy a Ferrari you will either not be able to eat or will be saving for a very long time. It might be more realistic to try to save enough money to buy a solid used car and leave the Ferrari for later in life.
Biddeford Savings’ website offers several different calculators to help you plan your savings – click on the Customer Tools icon on the home page to get to them. This process will let you know how much money you need to save to reach your goal.
Now it is time to go back to the budget you have developed and see if you can “afford” to save enough to reach your goal. If you don’t have enough extra income to meet your goal you have to choose; adjust the goal or change your spending habits so you can reach it. This is when the budget becomes really useful since it will allow you to make informed choices – is saving for that winter getaway vacation worth giving up 2 lunches out a week?
Those are the trade-offs we all end up making and if we have a budget we can make them in an intelligent manner, understanding the consequences of our choices. It comes down to a basic question, are you willing to do the work necessary to control your finances or are you going to allow them to control you?