Couples with middle-class incomes frequently struggle to save money.They try to harness every way in which they can cut down expenses and save money from their monthly budgets. This lack of extra cash puts stress on the family and on the marriage. Reducing debt and increasing income sounds like the formula to remove this pressure. For most couples, neither of these options can happen quickly enough to keep up with the rising costs of living.
The long term solution is to discipline yourselves as a couple to build your savings.
You may need to delay vacations and major purchases for a while to allow this to happen. It may even require you to stop adding to retirement investments that are untouchable sums of money, to free up enough cash to build a savings account. Once your current cash situation is improved, it will be a lot more fun to invest money.
If you do not save together, you will probably not save.
The first step is to sit down together and agree that you both want to change your spending habits and start to save. Once this agreement is made, you need to build at least a simple budget to determine how much money that you realistically have left over to save. Only include items that are already committed obligations in this budget. You can deal with your wants and needs in a later step. Make sure that you work on your budget together until you can show a surplus of income over expenses for a month.
Set short-term savings goals.
Every project needs some quick wins to give incentive to the participants to keep going. Building a savings account can seem like a steep climb at the beginning. You need some realistic goals to save toward that you can achieve quickly. Two methods can be used to accomplish this. You can set some monetary goals like $500 or $1,000.
The second method is to start two savings accounts.
One for your nest-egg account and the other is for something that you both need or want for your home. Fund the two accounts roughly equally. Anytime the short-term account reaches a level that allows you to make a targeted purchase, withdraw the money and buy the item. If you can get a bargain on the item, move the surplus into your nest-egg account.
Set long-term savings goals.
You need long-range savings goals to keep you focused. By staying focused on the finish line, you will work harder to get there. If small things come along and set you back, just pick up from where you are and keep plugging.
Use multiple savings tools.
By taking advantage of various types of savings tools, you can maximize your likelihood of success. Be willing to save some cash in a relatively safe place in your home. Having a couple of hundred dollars handy can prove invaluable if you have a dilemma at a time when it is difficult to get cash. Some people get a real feeling of security if they have greenbacks that they can touch.
Have a statement savings account.
This money is liquid, but not convenient. You have to go the bank to withdraw it. Having some funds in a money market type of account gives you checks, but limited numbers of withdrawals without penalties. Use short-term Certificates of Deposit. These are not great tools, but they keep the money just out of temptation’s reach. Generally, do not park more than a couple thousand dollars in CDs and not for more than one year. A shorter time is better.
Set a liquid asset goal and shift gears on savings when it is reached.
Once your savings accounts have enough money to take care of major emergencies and purchases, resume investing for retirement and your children’s educational needs. Always rebuild the non-retirement savings accounts if you have to tap them for some reason before continuing your investment plan.
Review the progress together once per month or every other month.
Sit down together and review your savings. You should do this no less than four times per year. More than once per month is unnecessary. Make any adjustments that are needed to maintain your savings rate and your lifestyle. Readjust your purposes for savings when needed.
Save some money just to enjoy.
If you have your short- and long-term savings well underway, it is time to consider one more savings account. When your income rises or expenses decrease, set a portion of that extra money aside to help fund vacations, travel, and recreation. You need to have some money to enjoy. Without this money, savings can become more of a chore than a blessing.