It is all too easy to spend money without even realizing it in today's world. When you have a savings habit, you will be much more aware of your purchases and how they affect your finances. Making regular deposits into a savings account can also help build your financial security over time.

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For many of us, saving money is not a natural thing to do. Instead, we see what we want in front of us and spend our hard-earned cash on something without giving it a second thought. Saving money takes time and discipline, but it will save you from financial problems that can derail your life goals in the long run.

This blog post will explain what a savings habit is and how you can use a simple rule to be more mindful of where your money goes.

What Is a Savings Habit?

Research indicates it takes 66 days to build new habits. When you save money after receiving a paycheck--regardless of how much you have after all necessary expenses have been paid for in advance--you've successfully created a new powerful habit! 

However, your savings habit is dependent on two factors:

• values
• goals

It all starts with your values and goals regarding your saving habits. But, first, ask yourself these two questions:

1) "What are my values in life?" Values can be your children, future career, living a comfortable lifestyle, or helping the greater good.

2) "What are my money goals (saving up for a down payment, more extra cash at the end of the month)?"

When you identify your values and goals surrounding the reasoning behind saving a good portion of your income, it'll be much easier to develop a consistent habit.

Let's explore one of the most essential steps in creating a savings habit: parking your money in a high-interest savings account.

Park Your Money in a High Yield Savings Account

High-yield savings accounts—rather than traditional checking or savings accounts, which generally offer interest rates of less than one percent—are the best way to help your money grow. 

High yield savings accounts offer rates as high as 0.75%, which is outstanding. By letting your money earn interest, you're setting yourself up for success down the road. On the other hand, traditional savings accounts only pay out an average of 0.03%!

There are a lot of different banks that offer high yield savings accounts, so take your time to compare these options before you settle on one. You want to make sure that the bank will be reliable and legitimate if something happens in the future.

If you have extra money and would like to use it to build up an emergency fund, a high-yield savings account can offer you the opportunity to earn compound interest on your savings while still giving you easy access to your cash. Plus, your money is protected and insured up to $250,000 in a high yield account!

The Most Important Rule When Saving Money

Have you ever struggled with keeping a budget? You're not alone. There are too many complicated budgets that don't consider a simple human error. To make budgeting simpler, let's look at what's known as the 50/30/20 rule.

The 50/30/20 rule is a helpful guideline for managing your finances. If you follow the rule, it can help you achieve savings, pay down debt, and buy things with cash.

Let's look at the breakdown:

Dividing your monthly after-tax income into three categories is the key to financial success. The first category covers what we need in life: food, shelter, and clothing for ourselves; medical care when necessary. Next comes wants such as vacations with family or friends twice per year (at least $500 each), cable, and internet. Finally, put money aside every single week, so you have a safety net in case of emergencies.

A Simple Example:

For example, let's say you earn $3,000 per month. If you were using the 50/30/20 method, you'd have $1,500 to spend on your living expenses, $900 on wants and lifestyle choices, and $600 to save and pay up any debt you may have.

The 50/30/20 rule helps you avoid overspending by allotting less money to frivolous purchases, thereby leaving more money for critical financial commitments like paying down debts or saving up enough money to make a big purchase.

What if you still have trouble saving your final amount due to high costs?

Cut Costs, Save More

Reducing your insurance costs by shopping around is one way to save money. Another is to re-evaluate your subscriptions for things such as cable, internet, or non-essential subscriptions. For example, you don't need cable, which costs a lot of money each month! Instead, join a streaming service such as Netflix!

Saving can be as easy as making a few intelligent decisions every week, like what you buy and where you go out to eat. You might also want to think about cutting back on some of your expenses, like cable or gym memberships.

Switching to cash-only will make you more mindful about your finances. You have the power - don't take advantage of credit cards! If you have any credit cards, make sure you set yourself a goal. For example, you could say I'll only spend $50 a month on my credit card. So many people go overboard and find themselves drowning in unnecessary debt!

There are many other ways to save money, but these tips can help you get started or continue down the path towards saving more every month!

Start Building Your Savings Today

A savings habit is one of the smartest things you can do for your future. It not only prepares you for unexpected expenses but also allows you to take advantage of compound interest (which we'll talk about another time).

Constructing saving goals isn't always easy, especially if you're used to spending everything you make. But, if you start small and gradually increase your savings over time, you'll be on the right track!