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Trying to save up for something big, like a vacation? Or even something a little smaller, like a new TV or a new cell phone? Or, are you just trying to put money aside for the future? Saving doesn't have to be complicated.

Saving doesn’t have to be complicated. It is the same as following a recipe. Once you get the key ingredients right, the method will take care of itself.

Saving is a word learned from the time you are gifted your first piggy bank.

As a child it is exciting to put away coins and notes from mummy, aunty and grandad, excitement building incrementally with the weight. The heavier it gets takes you one step closer to that giant ice cream or new toy.

Becoming an adult means trading up the piggy bank to a proper savings account. Gone are the days where birthday presents are cards stuffed with crisp notes inside. Growing your bank account means all the contributions come from your own pocket and the only way for it to increase is to have a savings plan. The sooner you accept this is the sooner you can start saving.

Here are five golden rules to help you become a more effective saver

1. Have a regular income stream

Whether you are a freelancer or a monthly salaried employee, it is easiest to set up a savings growth plan when you have money coming in regularly. If you don’t, all is not lost. It just means becoming more resourceful.

2. Choose savings account(s) to fit your needs

Research the best interest rates and benefits associated with different kinds of saving accounts. Do you want to save for short-term goals? Or do you want to increase your interest rates as you save more money? You may even consider opening two accounts one for day-to-day transactions and the other for medium- or long-term savings.

3. Pay yourself first

This is where having two separate accounts may come in handy. Decide how much you want to save each month and set up automatic transfers for when you get paid. This makes regularly putting money into savings something you don’t have to think about with every paycheque.

4. Be ready for unexpected life moments

An emergency fund with up to six months of living expenses can help you and your family in case of unexpected events like a job disruption or car repairs. A separate emergency savings fund means you may not have to use your long-term savings.

5. Create a budget and set SMART* savings goals

When you make a monthly budget, consider overestimating your expected costs. This way, you may end up with leftover funds, which can go right into savings.

Real-life reasons to save are the best motivators. After you have enough saved to support yourself for up to six months, start saving for short-term and long-term goals using this SMART* guideline:

  • SPECIFIC goals inspire. Setting a clear goal will help you focus on saving for it. Example: Save enough for a vacation.
  • MEASURABLE goals let you see the real task at hand. By using real numbers, you can measure your progress along the way. Example: A trip costs $3,000 and I have $800 saved
  • ATTAINABLE goals pay off. When setting your goal, ensure that it is realistic and within your reach. Example: I know I can save enough money each week to pay for that trip
  • RELEVANT goals make good sense. Set a goal only if you know it will be meaningful in the long run. Example: I am saving for a home rental because it’s cheaper than staying in a hotel
  • TIME-RELATED goals have a real deadline. Setting a time frame for your goal will help you stay committed to reaching it. Example: I want to go on a vacation by next summer.

6. Spend Smartly

It is hard to discuss saving without mentioning the word ‘spending’. It is normal to desire things but in order to stay on track with your savings plan, you also need to plan to spend wisely. Spending within your means may sound simple to follow, but many people spend more than they save, which equals debt. The good news is that it can be avoidable, and it is reversible over time. With a little planning, tracking and adjusting your spending, you can live happily within your means and save, continuously building the life you want.

Asma Ali is a freelance writer and creative director based in the Caribbean

*adapted from Practical Money Skills with permission

This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.