So, if you really want to achieve your savings goal, and you want to start saving more, develop your personal savings plan. Take the steps revealed in this article to create a solid savings plan.
1. Make Record Of Your Spending
The first thing that you should do towards figuring out your personal savings goal is to keep track of your expenses. Keep track of everything spending you make. Don’t try to be fair on your cost of cash tips, coffee, and household items. Take record of everything – no matter how high or negligible you think the cost is.
After putting out your data, arrange them in numbers by categories. For instance, state the cost for groceries, gas, rent and total each amount. Compare your bank statements and credit cards to your result to be sure your record is accurate. Ensure you leave nothing out.
To achieve this properly, get a free spending tracker. There are budgeting tools, apps, and sites that can help you achieve this.
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2. Consider Ways To Cut Down On Your Spendings
If you are having a tough time achieving your savings goal, you may need to start cutting down on your expenses while really hurting yourself. Highlights nonessentials which you can bring down how much goes into them. Look into your dining and entertainment.
Bear in mind that you do not have to cut out your favourite avocado snack to achieve your savings plan. But if you demand takeout lunches 5 days within a week, you might consider cutting down to 3 days. And par up by bringing less expensive meals from home for the remaining days. This method is kind of pain-free, and would still put you on course towards your savings goal.
Some More ideas to help cut down on your everyday expenses include;
i. Strike out memberships and subscriptions you aren’t really using. Especially the one that just renews itself automatically.
ii. Use stuff such as community event listings to pick out low-cost or totally free events to bring down your spendings on entertainment.
iii. Cut down on eating out as much as you can.
iv. Whenever you are tempted by some nonessential expenses, wait some days before taking the decision, you are likely to be glad you did, or be prepared to save up for it.
3. State Your Savings Goal
What exactly do you intend to achieve with your savings plan? Do you intend to save for a project, a luxury, a vacation, marriage, a home, or in preparation for retirement? State your savings goals. Draw out a list of specific things you intend to achieve on a long or short-term. This will guide you in setting the blueprint for your personal savings plan.
For instance, for your short-term goal, target like one to three years. And your long-term goals should go for like four and more years. If you plan on saving for the education of your child or for retirement, put the funds into an investment account such as a 529 or IRA plan. No doubt, investments come with their own risks, but then, it would give you an opportunity to expand with the growth of the market. It is only right for you to plan ahead for an event.
Reaching your short-term goals and enjoying the rewards it brings will give you the psychological boost to achieve even more and reinforce the habit for personal savings.
4. Make Every Dollar Important
Ensure the money you intend to put into savings will be working for you. According to a survey by Mintel, 73% of consumers use a savings account, but the average savings account only pays about 0.06% of a yearly percentage yield which is according to the Federal Deposit Insurance Corp. That is even if you have a robust balance in your savings, let’s say $10,000, a little APY will not give so much boost. For instance, at 0.09% APY, that given figure will only produce less than 10 bucks after a year.
Higher-rate savings accounts often provided by online banks yield more. This is especially because these online banks do not have physical branches. So, they pass on the savings to their customers by giving out higher rates. And with that same $10,000 in a high-yield savings account, you are likely to have an increase of 1.80%, which means you will be having more than $180 in addition after 12 months.
This extra funds will continue to produce more as time goes on. And this is plus your initial deposit. This accumulating interest will give a better boost to your cash balance than if the money was deposited in a lower-rate savings account.
5. Automate Your Savings
A Mintel report revealed that about 54% of online bank customers affirmed that the mobile apps of their financial institutions make it much easier for them to deal with banks. And since you can also harness them in automating transactions, they in fact, become your best tools when it comes to your personal savings.
Consider setting up automatic transfers, so that you would have a specific amount moved from your regular account into your savings account everyday. You can guess right that after a few periods of time, your savings balance without you putting in so much effort on your side.
6. Harness The Right Tools
If you are considering saving for the short-term, then go for these FDIC-insured deposit accounts:
– Savings account
– Certificate of deposit (CD), that freezes your money for a given period of time but at a higher rate compared to your savings accounts.
And for long-term savings goals try out:
– FDIC- tax-effective savings account, insured individual retirement accounts (IRAs)
– Securities, such as mutual funds and stocks. They are provided via investment accounts with a broker-dealer.
Do not forget that the FDIC doesn’t have your securities insured, and your deposits or other obligations of a bank and are not guaranteed by a bank. In essence, all these are subject to the risks of investment. This includes the possibility that you could lose your capital.
Note that you do not necessarily have to go for just one account. Weigh your options and put things like fees, balance minimums, and interest rates into consideration before settling for the right mix that will make your savings goal a reality.
7. Watch Your Savings Yield
Make a monthly evaluation of your budget every month. This will both help you stick to your personal savings plan, and also help you figure out and correct issues with your finances quickly. When you get inspired by your savings plan, it would even help you find more ways to go about doing your savings to achieve faster goals.