Opt for long-term savings lifestyles

Short term and long-term extreme savings often cause overspending in the future.

12:55 24 January 2014

Everyone who has ever tried a fad diet knows that they just do not work. It is too difficult to maintain and often times those diets are unhealthy as long-term changes. Similarly, financial health should involve savings but saving too much without allowing a spending budget can yield poor results.

The key to build savings is to take a long-term approach and realise that savings will build up over time. You have to give yourself permission to start small.

Here are a few other tips to help you keep a long-term approach to savings:

• Planning—if you balk at the word “budget”, you are not alone. If it makes you feel better, develop two plans: a savings, and a spending plan. Including a spending plan automatically gives you permission to spend, but you will be more likely to use the funds more wisely if you set a limit. Do not cut out spending money completely, it is a recipe for disaster.

 

• Lifestyle—one of the most difficult parts of trying to save, is figuring out if you need to maintain your current lifestyle or if you should make a few changes to set yourself on the right financial track. This part can be unpleasant, but sometimes necessary if you are living from one payday to the next.

 

• Prioritise—Before you start cutting certain things out of your expenses or spending plan, you may want to make notes about what you would really like to have and what you can live without. You might even try ranking them numerically so it is easier to go back and make changes when you do decide to cut things out.

 

• Ultimate goals—your savings and spending plans should always keep your ultimate goals in mind. You are more likely to stick to a savings plan when you can see progress toward your preferred goal.