Pay yourself first. Every personal finance book or article says it. But what does it mean? Really mean? How do you do it? Here's 5 simple steps to help you on your way.
1. It means what it says - your savings comes before paying for anything else
Basically, it means taking money off the top to pay for your goals. Focus on at least two areas - putting a minimum of 10% of your pretax income into retirement accounts, and another 10% of your post-tax income away for emergencies, house downpayment, etc. Live on the rest.
2. Set some goals to give yourself a reason to save
The easiest way to make yourself save is to set some goals. Goals don't just happen, they have to be created. So sit down, or go for a drive together and talk about them. A house. A beach vacation every year. Sending your kids to college debt free. Then start putting money away for those goals. And don't touch it - except to pay for one of them. So you can't put away all you think you should yet? That's okay, start somewhere. Goal setting can be fun - list all your dreams.
3. Get the money deposited into savings automatically
This is the best way not to feel temptation to spend it on something else. With retirement accounts, automatic withdrawal to a 401k or IRA is best. With more liquid savings, set this up to automatically get deposited into an account you can't get at with a debit card or easily. Out of sight, out of mind.
4. Find the money to save by combing through your budget
And figuring out what you can cut. I'll put it this way - would you rather have a new shirt, or a home of your own? When I go through our budget, I often find it's not the big-ticket items that get us. Those are well planned and accounted for. It's the steady dribble of small-dollar purchases that are our budget busters. Cutting back to 1-2 meals out a month has made a huge difference in our positive cash flow.
5. Don't give up
If you fall off the wagon and spend some of your savings, don't think "Oh, I'll never get anywhere, I should just quit." Telling yourself that is just going to become a self-fulfilling prophecy that you don't want to have come true. So just put yourself back on the saving wagon tomorrow and keep plugging. You'll hit your goals...and even if it takes 4 years instead of 3 to accomplish something, that's better than never.