Breaking your bigger savings goals into smaller, manageable chunks can make your financial goals more achievable.
The end of the year is the perfect time to think ahead about your savings strategy for the following year. If you're currently without an emergency fund or want to bulk up your savings, you can increase your savings contributions to save more in 2022. Do you want to save an extra $5,000? Here's how you can achieve that goal.
Having extra money saved is important
Having extra savings is beneficial. Life can be unpredictable, and that means unexpected expenses happen. When you have minimal savings, expensive costs can be stressful. If you haven't saved much money and get hit with a surprise expense, you may accumulate credit card debt. By starting an emergency fund, you can ensure you have the savings needed to handle unexpected costs.
Once you have an emergency fund, it's a good idea to contribute to it regularly to increase your savings. If you're not happy with your current savings account balance, it may be time to change some of your savings habits. Automating your savings contributions is an excellent way to ensure you save enough money.
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Here's how to save an extra $5,000 in 2022
We are only a couple of weeks away from the new year. If you're looking to increase your savings in 2022, now is the time to figure out how you'll make your goal happen. First, you'll want to outline your savings goal and figure out exactly how much money you want to save.
Larger goals may feel more challenging to reach, and it's completely normal to feel overwhelmed. Breaking up a bigger financial goal into smaller, bite-sized chunks may help your goal feel more attainable.
By automating your savings and regularly contributing smaller chunks of money, you'll be more likely to meet your larger savings goal. Let's imagine you want to save an extra $5,000 in 2022. To succeed, you'll need to do one of the following:
- Save $1,250 per quarter
- Save at least $416.67 per month
- Save at least $192.31 bi-weekly, or
- Save at least $96.16 each week
If you choose one of the above savings methods and stick to your plan, you'll be successful in saving an extra $5,000 throughout 2022. You'll need to choose the saving strategy that works best for you. Depending on how often you get paid and your financial situation, it may make sense to save more or less frequently.
Separate and automate your savings
Once you decide on a plan that will work for you, it's time to prepare for next year. If you don't yet have a separate savings account, you may want to consider opening one.
By keeping your extra money in a different account than the one you use for regular spending, you'll be less likely to spend it. Next, you'll want to automate your savings. Set up your automated savings withdrawals and make sure they begin in January.
Planning now will ensure you're ready for the new year. You can make your financial goals happen, and some goals may be easier to achieve than you think. If you need additional advice on how to manage your finances, prioritize debt payoff, or learn how to invest, check out these personal finance resources to learn more.
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