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How to Build Up Your Savings Even If You Have Debt

How to Build Up Your Savings Even If You Have Debt

Co-Founder and CEO of Snowball Wealth sat down with Latinx Therapy to discuss how to build up your savings even if you have debt! She answered the big question, Why is saving so difficult, and what can we do about it? Tanya breaks down why it is difficult for most people to save and gives practical tips to start building wealth. This is what we learned:

Get Rid of Bad Habits and Start Building Good Ones

The money habits you’ve learned growing up are difficult to get rid of as you get older. If you grew up in a household that didn’t manage their finances well, you will most likely also have this problem as an adult. We should also consider that there are times where people are more vulnerable to making bad financial decisions. For example, if they have a very stressful job, it is more difficult to have the discipline not to eat fast food after.

Along with this, people might have emotional spending habits that can contribute to overspending. What she suggests is tracking those moments where you start spending more than you want. The worst thing you can do is know that you are overspending and not try to get a hold of it.

If You Can’t Decrease Your Expenses, Try Increasing Your Income

Building your emergency savings can be especially difficult when you don’t know where your money is going. Figure out how much income you’re bringing in, how much debt you have, and how much you can realistically put in a savings account. After doing this, you’ll have a better idea of where and if you can cut expenses.

Those who have credit card debt and student loan debt might be extremely overwhelmed and anxious, especially if the debt keeps growing. People tend to feel like they are stuck in a cycle where they barely make ends meet every month when their expenses exceed their income. It can be extremely discouraging when this happens, so she suggests looking at your income first. Are there ways to increase your income? Can you get a salary raise? Can you get a job that pays you a higher wage? Is there a side hustle you can take on?

Pro Tip: If you do increase your income, don’t increase your lifestyle along with it. Make sure that additional income is going directly to your savings account, investments, or debt.

Once you have a steady income, try reducing your expenses. This part can be a little more challenging, and that’s why she first suggests finding ways to increase your income. Start by simply tracking how much you are currently spending monthly. Then, make the goal of reducing one area, whether that be groceries or shopping.

Make Sacrifices If You Can

Remember, sometimes getting to a financially secure place will require sacrificing short term gratification! It helps to remind yourself that the sacrifice will be temporary. Some sacrifices that can help you get to financial security is living with your parents while increasing your savings account. Maybe consider living with roommates for a couple of months to cut costs on rent. The most difficult part is using that extra money to get ahead of your finances.

If this is difficult for you, try setting up as many automatic transfers as you possibly can. Start with a reasonable amount that you can contribute to your savings a month and into an account you’re not touching on a day to day basis.

Bonus Tip: Keep an accountability partner. When you are surrounded by people who are also on their way towards financial freedom, they understand the struggles and emotions that come along with it. You can join Snowball’s slack community to be around women who uplift you and offer tips and resources.

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