A good savings plan is a road map to a better financial life. If you create one and follow it, you’ll know you’re looking out for your future self. A savings plan doesn’t have to be difficult, but it does require commitment.
If you are confused about how to plan your savings, here’s a saving planning guide for your future that could help you implement a practical, smart, and effective money management plan.
Set realistic saving goals
Determine what it is you want to achieve. Do you want to save for a vacation, set aside money to purchase a home, or add to your retirement nest egg? Creating a list of specific short and long-term goals can help you form the blueprint for your savings plan.
Here are some examples of short- and long-term goals:
Short-term (1–3 years)
Down payment for a car
Long-term (4+ years)
Down payment on a home or a
Your child’s education
Start where you are
Get an idea of your current financial picture. Determine how much money you have to put toward savings each month. Make a list of all the money you have coming in each month from your job, any investments you own, child support, or any other source of income. This will help you figure out how much you can save.
A fundamental way to manage your savings is to record income and expenses and draw a budget for savings, investments, and big purchases. Use mobile apps to monitor income and expenditure. This will help you stay on a smart financial path with a futuristic vision.
Keeping an account of expenses like food, rent, utilities, taxes, debt, etc will help you evaluate your expenses and stay within your financial limit.
Tip: You can follow the 50/30/20 budget rule and include a savings category—aim to save 15 to 20 percent of your income.
Set up automatic transfers so that on each payday, for example, a specific amount of money is moved from your checking to savings. Have money automatically transferred to your savings account when you are paid to avoid the temptation to spend. Over time, you’ll be able to watch your savings balance grow with little extra effort.
Once your savings plan is in place, look for ways to save more. If you receive a pay raise at work, consider sending the extra funds straight to savings.
Review your budget and check your progress every month. Not only will this help you stick to your personal savings plan, but it also helps you identify and fix problems quickly. Understanding how to save money may even inspire you to find more ways to save and hit your goals faster.
No matter how much or how little you earn, it is important to save money wherever and whenever you can. The more we get into saving money, the easier it is to achieve our goals and get ahead. It’s better to save for things – a phone, a car, a holiday – than to go into debt to buy them.
A savings plan is a good step toward financial well-being. Put that plan into action and you will be well on your way to building a secure financial future.