Managing money can be a challenge, but good money savers know how to balance their finances while still living a good life. Sure you can skrimp and put away every penny in order to grow your stash, but arguably that’s not a realistic approach to living a fulfilled life.

We researched the subject of savings a fair bit and found that there are a few key common habits that people who consistently prioritise saving money practice in order to set cash aside while still living a life of fun and adventure. Here are the five main things that money savers do to manage their money well.

Pay Yourself First

People who have a good track record of saving money on a monthly basis have an essential outlook on their income. They carve out a portion of their earnings for themselves first. So, before you hit the payment tab on your banking app and start sending money out to cover your bills and other expenses, you ‘pay’ yourself first. What we mean by this is, you allocate a set amount to yourself before you hit pay on all your responsibilities.

The logic is that out of this mindset, you can decide what portion of ‘your’ money goes towards entertainment, self-care, and that sort of thing, as well as, of course, your savings. Using this mentality means that you can remember to look after yourself while also building your savings and achieving your financial goals.

Get Automated

There are some tips that will continue to exist in every article you ever read about how to save money, and that’s because they just work. With that in mind, while you may think that the advice to simply automate your savings by setting up a direct deposit from your paycheck or by using a savings app is highly reductive or boring, the fact is that it works.

It takes the emotion and temptation out of things and becomes an almost meaningless transaction where money is automatically tucked away. You don’t have to think about it and there’s nothing holding back on making that deposit, like hesitation around whether you should save this month or treat yourself a little more.

Build An Emergency Fund

Good money savers know the importance of having an emergency fund separate to their savings. What you do is, put a little aside out of your savings amount into separate fund. It’s like a side savings hustle that you’ve got going on to cover unexpected expenses, such as car repairs or medical bills. Just note that with this approach, you’ll be saving a lower amount for emergencies, meaning that it will take time to build this fund. Still, it’s worth it.

We recommend that you start by setting a savings goal, with an amount that you’ll pay out of the ‘your money’ portion of your income. You can then sliver off a portion of this savings budget to go into your emergency fund, to give you peace of mind and help you avoid going into debt when unexpected expenses arise.

Track Those Expenses

Successful savers track their expenses to see where their money is going. And when we say ‘track,’ we mean that they actually use tools like budgeting apps or spreadsheets to keep track of their income and expenses. The old adage is true – you can’t manage what you don’t measure, so if you want to be someone who actually saves money on a regular basis, you’re going to have get a firmer grip on how you use your money.

Draw Up A Financial Plan

You’d think that we would say, “Successful savers set a budget to track all things going in and out of their accounts.” And the thing is, this is kind of true. People who save do have a budget. But more than that, they actually have a financial plan that outlines their goals and roadmaps how they plan to achieve them. They set specific savings goals and create plans to reach them. It’s more intentional and proactive than just sticking to the confines of a budget. Because while that makes sense to be strict and make decisions not overspend, it’s hardly the most encouraging action to take.

Feeling informed?

We hope that you can build these tips into savings habits that suit your needs and goals and that you will become a successful saver – and achieve financial freedom! Remember, managing your money is a journey, and it takes time and effort to achieve your financial goals. But with persistence and discipline, you can achieve financial success and live the life you want.

Don’t forget that AA Inform is home to a range of useful tools and resources, including a personal loan calculator, access to multiple car and home insurance quotes, property valuation reports, and much more.