We’ve all been there. You glance at your savings account, and it hits you — it’s just not enough to cover that emergency expense or that dream purchase you’ve been waiting years to make. It might be a health emergency, an urgent home fix, or a well-deserved vacation, but sometimes your savings aren’t enough, and you can feel the panic creeping in.
In this piece, we’ll cover several strategies that can help you get back on your feet when your savings are dwindling. From better financial planning to making small but impactful spending adjustments, let’s cover tangible tips that can make a difference.
Step 1: Take a Good Look at Your Current Financial Status
First, you need to get a sense of where you are now. Step back and review all your income, expenses, and debts. Make a basic budget (or use a financial app if that’s what suits you) to visualize where your money is flowing. Are there any excess expenses you might trim back? Perhaps subscriptions you’ve forgotten about or everyday habits that cost you over time?
Most people don’t know that daily small expenditures can quietly drain savings, so it will enable you to set priorities if you know where your money is going. Look for areas where you can institute changes, no matter how small.
Step 2: Review Your Financial Goals
You might have set financial goals previously that aren’t in line with where you are now. For instance, perhaps you’ve been trying to save for a new car or home, but with less flexibility in your budget, those goals are no longer feasible. Rather than eliminating them completely, reduce your expectations to fit your new financial reality.
Re-evaluating does not mean abandoning your dreams. It means being realistic and flexible. For example, if your original dream was to save $20,000 for a down payment on a home within a year, but your savings account currently stands at $5,000, then it’s time to re-evaluate.
Step 3: Create an Emergency Plan
Even though no one saves for a rainy day, an emergency fund is a reasonable minimum to prevent panic when something goes wrong. It’s easy to neglect this buffer when all is going well, but having at least a small emergency cushion can save you financial stress in the future.
Start by setting aside even a small amount each month, as small as $20 or $50. The idea is to consistently add money to your emergency fund so that you’ll have some money available when emergencies arise. Consider making it automatic so that the money is sent regularly with no effort. You should review this plan on a regular basis to make sure it remains relevant to your current circumstances.
Step 4: Know When to Borrow
When the unexpected happens, it’s only human to think of quick fixes — like taking out a loan. These loans may seem like a lifeline when you have a sudden expense and don’t have the cash on hand. But before you go down this route, it’s worth asking yourself: “Is this the best option, or am I simply avoiding having to face the bigger picture of my finances?”
If you have a little savings account and limited options, it may be time to take a look at your spending and prioritize your long-term financial well-being. A cash loan is one potential short-term solution, albeit typically at high interest rates and with hefty fees. If you do take one out, make sure you have a solid plan for paying it off as quickly as possible to avoid falling into a debt trap.
Step 5: Get Creative with Your Savings Plan
If your savings aren’t quite there yet, maybe it’s time to look at other options to boost your financial situation. This could mean picking up a part-time job, selling some items around the house that you no longer have a use for, or investing in something that might have the potential to bring in some extra income. Sometimes it means thinking outside the box to create the financial cushion you need to get back in good standing.
You don’t have to take on something massive.
Step 6: Set Up Automatic Savings
Automatic transfers are the easiest method to ensure that you’re saving at all times, even when you’re busy. Set up automatic transfers to your savings account, even if it’s small. For example, set up a transfer of $100 a week or a month and see it accumulate with no effort on your part.
The genius of automatic savings is that it removes the decision from the equation. You’re saving by default, and the small transfers add up over time to something substantial. By automating your savings, you can avoid the temptation to spend and stay on track to building your financial cushion.
Step 7: Consider Improving Your Budgeting Process
If you are finding it difficult to save, your budget needs to be adjusted. There is no one-size-fits-all method of budgeting that is right for all people. Some prefer the envelope method, where you place a fixed amount of cash for each spending category, while others use electronic methods that automatically record spending. Find a savings account system that you can work with and stick to it.
Step 8: Give Importance to Long-Term Financial Planning
Your goal here is not simply to survive your current financial woes; it is to develop a plan that will serve you well into the future. This means taking into account things like retirement planning, investing, and long-term financial goals. You may be focused on short-term necessities, but it is also important to keep an eye on the big picture.
Step 9: Never Hesitate to Ask for Professional Intervention
We could all use additional guidance from time to time. If you are stressed about your savings account or simply don’t know what is best for your future, consider speaking with a financial advisor. They will work in conjunction with you to create a plan that’s specific to your own financial situation and give you the knowledge you need to make improved decisions moving forward.
