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If you’re like most Americans, you probably find saving money to be quite difficult. It is hard to set aside money each month when we have a world of shopping available at our fingertips, and busy lives that may lead to us devoting less time to budgeting and making good financial choices. Saving towards any goal, whether it be retirement, education or a home, is challenging. It requires consistency, hard work and delaying gratification — and a savings strategy that suits your particular personality.
Setting up a savings plan that is based on your personality type can be an incredibly smart move because it allows you to set aside money in a way that you personally find rewarding. Just as there is no one-size-fits-all budget, there is also no perfect savings plan for everybody. The following five savings plans will help you reach your financial goals — no matter what your personality is!
The Goal-Oriented Saver
Some of us make lists for the sole purpose of being able to check off items that we have completed, even including things that we have already done just to feel more accomplished. If that sounds eerily familiar, this savings plan might be for you.
Fuel your sense of accomplishment and make saving into sort of a game by setting small, manageable goals each month — and then check off those goals one by one. You can open up different accounts for each particular goal, such as one for a vacation fund and another for a down payment on a house. Set goals each month for the amount that you want to put into each account — and then try to beat the goal the following month.
You can even set more creative goals, like packing a lunch every day for a month to save money on eating out, and then devoting that extra cash to meeting your savings goals. If you’re working towards these goals with someone else, set up a competition to see who can save more each month. You can also download a financial tracking app to check your progress and ensure that you’re on track towards meeting your goals.
The Visual Learner
Many savings goals involve something abstract or far off in the future — like a new home or a cushy retirement. For those who learn best by visualizing, creating something concrete can be the key towards reaching financial goals.
It may sound cheesy, but making a visual representation of what you are saving for can work wonders for anyone who needs a physical reminder of what they’re hoping to achieve. Create a “dream board” for your savings goals by drawing or cutting out pictures of what you want — a RV for traveling around the country in retirement, or a new car or a beautiful new kitchen.
Keep it in a place where you can regularly see it — and be inspired to keep making good choices so that you can meet that goal. You can also create a visual representation of your progress by coloring in a chart as you get closer to reaching the amount that you need to be able to buy a car, afford a kitchen renovation or even retire early. These techniques can make a huge difference for anyone who isn’t inspired by numbers on a piece of paper or a screen.
Some people just aren’t that into the details, and don’t want to have to think about saving each much. And if that’s your personality type, it is perfectly fine to do this — as long as you spend some time up front to set up a savings system that does not require much attention.
One way to do this is through automated savings programs, such as automatic deductions for your 401(k), or a monthly transfer from your checking to savings account. The money will come directly out of your paycheck or account without you having to do anything further, but that doesn’t mean that your work is done once you set up the transfer. Review your savings plans and goals at least once a year, preferably with an expert like a financial planner. You may find that your savings goals change over time, and that you need to adjust your automated system to accommodate life changes like a new baby or house or a planned retirement.
The Conservative Investor
Taking risks with your money isn’t for everyone. If you’re nervous about the potential for a stock market crash or other event that could wipe out your hard-earned savings, you need to find a way to minimize risk while maximizing the potential growth of your money.
The issue with conservative investors isn’t that they have problems saving money — it’s that they don’t want to put their money into any account where they could possibly lose a portion of it though volatile markets or fluctuating interest rates. The challenge here is to find investment vehicles that have a greater growth potential than traditional savings accounts — but with minimal risks.
If you fall into this category of saver, consider putting some of your savings into an online savings account, which often will have higher interest rates than those offered by local banks, a certificate of deposit or money market accounts. A financial planner can help you find investment and saving vehicles that lower your anxiety while increasing your ability to grow your wealth.
In contrast to conservative investors, some people are born risk-takers — and that includes taking risks with their money. But bigger risks don’t always lead to higher rewards. A big financial risk could lead to ruin, particularly for anyone drawn to get-rich-quick schemes or other risky ventures.
For risk-takers, there is a way to save money securely while still taking some chances with a portion of that money. Designate a percentage of your savings or investment money that you are comfortable with losing if the risky investment does not work out — perhaps 5 or 10 percent. Sock away the bulk of your money in a stable account, and utilize the rest to play around a bit with investments in the stock market, hedge funds or real estate. In this way, you can satisfy your desire to take risks — without gambling away your future.
Finding a way to save that fits your personality is the key to long-term financial success. If you have trouble saving money, consider putting one of these ideas into action — it may be exactly what you need to get motivated to put aside even more money!
Author: Jeff Gitlen