Building savings helps secure the future and having to dip into your savings means you are throwing away your financial security. Here are some ways you can stop dipping into your savings account each month, and start building savings instead.
Set up an emergency fund
If you have a separate emergency fund to handle unexpected expenses, then you will no longer need to dip into your savings account to cover unexpected expenses like car repairs or medical bills.
Although using your emergency fund may seem like you are dipping into savings, you really are not because you have earmarked these funds ahead of time to cover these expenses.
Switch to cash-only
When having a hard time sticking to your budget, it is helpful to identify your problem spending areas and avoid them altogether. Another solution is to switch to cash only to pay for the majority of your expenses.
Set up auto debit for all your bills and savings contributions, then see how much money you have left over. That is how much you have to spend. Take out that amount each week or month, and when it is gone, it is gone. When you are using cash only for your spending, it takes a lot more work to overspend since you have to actually take the money out of the bank.
Move your savings to another bank
If you put your money in a different bank than your debit card, or open an online savings account, it slows down how quickly you can access the money, since you have to manually transfer it, then wait for the transfer to clear.
This can help curb impulse purchases, but you still have access to the money if you need it. You can have your money automatically transferred into this account each month. It makes it easier to allow the money to grow instead of relying on it to cover your overspending.
Adjust your budget
If you are consistently dipping into your savings, this is a sign that there is something wrong with your budget. You may find that you need to adjust your spending in your grocery category or other areas to cover increasing costs in utility bills.
Taking the time to write down your spending each month, then adjusting your budget accordingly will make a big difference in how much you can effectively save each month. You may be surprised at how much the small daily expenses are really costing you.
Find additional income
It may be that you are not making enough to cover your expenses each month. If you are dipping in to cover your basic expenses each month and not to cover emergencies or overspending, you will need to find additional sources of income or look for a new job.
Increasing your income can make it easier to save. Picking up a second job that allows you to earn tips can also help you cash flow any smaller emergencies that may come up.
Find ways to cut your other expenses
If you are regularly dipping into your savings, it may be that you took on too many other responsibilities such as buying a car or house that you cannot afford. This can really cut into your ability to cover your necessities or feel like you are enjoying life.
You may need to cut extras like cable television or your gym membership to make ends meet and work toward your financial goals. Additionally, you may need to take more drastic actions like selling your home or car and downsizing to something that you really can afford.
Reward yourself for milestones
Another way to stop dipping into your savings is to reward yourself as you hit each milestone. Start with smaller rewards close together to help you build momentum, and then space them further apart and give yourself bigger rewards as you reach your goals.
For example, for your first N10,000 saved, you may reward yourself with a video game or a new pair of shoes. Once you reach N100,000, you can reward yourself with something a bit nicer like a weekend vacation or something similar.
Stick to your budget
This seems so obvious, but it is the simple truth. If you follow your spending plan each month and stick to it, you will not dip into your savings account. If you do not have a budget, it is not surprising that you end up borrowing a bit here and there to cover things like groceries or the utility bills. If you currently do not have a budget set one up today. This is the best way that you can get control of your spending and stop dipping into your savings account. Checking in on your spending each day can really help you stick to your budget.
Stop using your credit cards
It does not make any sense to be putting money into savings when you are using your credit card and carrying a balance. You are paying more in interest each month then you would earn in interest on your savings account. If you really want to protect your savings, you need to clear up any credit card debt that you have. Make a plan to get out of debt today and stop carrying your credit cards with you, so you will not be tempted to use them.
Get serious about the way you spend money
If you are struggling to get by each month and dipping into savings because of spending, you can protect your savings by sticking to basic spending rules. There are a number of strategies you can employ including switching to cash for your shopping, couponing and only buying things you need when they are on sale. Additionally, you can work on reducing your monthly bills to free up more money to cover your every day expenses. The more proactive you are about how you work to save money on what you are spending, the more successful you will be at protecting your savings account.
