By far the smartest way to avoid going bankrupt is to save. It is sad, that most people do not realize the importance of savings. It is an art that not only helps you maintain a healthy financial position but also aids you when the situation resembles more of a crisis. For most of you, saving becomes a hassle as you do not have a direction or guideline as to what and where you can save your money. If that is the case with you, follow the simple tips listed below that will allow you to save effectively and efficiently.

1. Set Goals for Saving

Like every other thing, saving also needs motivation. Decide what you are saving for; whether it’s that sports car you have always wanted, or the homely diner you always wanted to own, it could even be a dream vacation or simply buying a house in five years time. Set a target and then work out how much you need to save every month to achieve it.

2. Set Aside Your Savings First

As soon as you receive your paycheck, set your intended savings aside no matter how big or small the amount is. If you fear you would sway at it if given an option, set up an auto debit from your pay account to your savings account. That way you would not cheat yourself out of a good long term savings.

3. Create an Interest-Bearing Account

Keeping your savings and checking accounts separate reduces the chances of you borrowing out of your savings from time to time. For long term savings, explore options of investing into products that will yield higher returns for you.

4. Save on Utilities

Save on your utility bills where you can. Lowering down your water heater thermostat can help you lower down your monthly energy costs. Opt for tankless water heaters instead of the conventional storage tank water heaters to further reduce your utility spending.

5. ‘Staycation’ Instead of Vacation

Everybody needs a vacation. It’s only fair that you take a break every now and then fly off to your dream destination spending a fortune. The idea is to take a break and while you are saving, a better option would be to look for fun vacation spots close to your home-it will cost you far less than an overseas vacation.

6. Take Home Packed Lunch

One of the most convenient ways to save is to save a little every day. If you buy lunch at work every day, it surely costs more than it would to take home-made lunch along. For example, if you save $4 on an average, you can create a good fund amounting to $1000 by the end of the year.

Simply put you can end up saving a valuable amount given you implement these basic habits into your life and making an effort to save.