Three steps to building a smart savings plan
When you want to get fit, whether it鈥檚 physically or financially, you鈥檝e got to train if you want the gain. By听training yourself to save, you鈥檒l learn a new habit 鈥� one听that will literally pay off, all year long.听Having a plan to reach your goals makes things easier.
Whether you鈥檙e starting from zero or you鈥檙e a saving pro, we鈥檒l show how you can prepare for big expenses in 2016 and prevent听them from draining your bank account.
So, where are you when it comes to being a financially fit saver?
Level 1:听What savings plan?
You鈥檙e pretty 鈥渕eh鈥� about planning out big expenses for the year. But simply听figuring out what you need to save for can make life less stressful. Stop avoiding it; just sit down and make a list. Here are some things you might need to save for in 2016:
- Gifts:听Birthdays, holidays and other special occasions add up. Set aside a bit of cash every paycheck and you won鈥檛 have to skimp on presents for your BFF.
- Replacing or upgrading stuff:听Want a shiny new toy, like the latest iPhone or a car? Saving up will make it hurt less when you have to hand over all that money.
- Moving:听It鈥檚 more expensive than you might think and can wipe out your savings. If you鈥檙e moving to or within an听, save up enough to cover first month鈥檚 rent (and maybe last, too), deposit, fees, a rental van and moving supplies like boxes and tape.
- Job-related expenses:听You might be job hunting or just starting at a place where you need a more professional wardrobe. Or maybe you want to learn some new skills for work. If you have career ambitions that鈥檒l come with costs, saving up for them bit by bit will help.
- Travel:听Wanderlust much? Getting your travel fund going now means being able to plan amazing trips later with fewer financial limitations.
- Freelance taxes:听The loveliest part of hustling for yourself 鈥� figuring out your own taxes. Setting aside an听听with each payment from a client will make quarterly taxes a bit less painful.
Soooo, you probably can鈥檛 afford to save up for all these big expenses听and听cover everything else in听. Prioritize big-ticket items so that if you can鈥檛 afford them all, or if other things come up, you can put saving for the less-important expenses on pause.
Level 2:听You know what鈥檚 up
You鈥檝e got your big expenses for the year on lock. Here鈥檚 how to figure out how to save for them all.
- Divide each big expense听by how many paychecks you have until you need to pay up.
- Take your expected income for the year (underestimate to be safe) and听subtract your necessary costs听(food, rent, etc.). The disposable income you have left is what you鈥檝e got to work with.
- Add up all your big expenses听to see if you鈥檝e got enough disposable income to cover them all. If you don鈥檛, cut the less important ones or make them less expensive (like DIYing gifts).
- If it makes it easier for you,听create a听听to hold funds for big expenses.
The best part about following a savings plan? If some of those big expenses don鈥檛 happen, you have something to fall back on when you need it.
Level 3:听Beast mode is ON
You鈥檙e like the Beyonce of financial fitness (nah, no one can top Bey). You know exactly what you need to save for and you鈥檝e got a plan, so pair up with a friend to spread the wealth.
- Hitting the gym is easier when you鈥檝e got a workout buddy, and the same goes for hitting your savings goals.
- FOMO can hit hard when you鈥檙e trying to cut back on spending. But you鈥檒l feel less like you鈥檙e missing out if your bestie鈥檚 along for the ride.听
- Once you and your financial bestie have your savings plans laid out, agree to encourage听each other to stick to them. You鈥檒l both have an easier time training yourselves to save,听and听you have someone to go on (free) fun adventures with throughout the year.
Ready to get financially fit?
Looking ahead at the whole year can be intimidating. Who knows what will happen? Oh wait,听you听do. You know what big expenses you鈥檝e got coming up, and now you鈥檙e ready to save for them from the start.
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