It’s the beginning of a new year, which for many people means new beginnings. Make a resolution this year to start a savings plan, and follow these tips to make it work!
Set a Goal
Understanding what you’re saving for will help you to stay focused and on track throughout your savings effort. While each person will have different goals, it’s important to identify goals that are important to you so you can have those goals at the forefront of your mind when it comes to making daily decisions.
See Where You Stand
Knowing where you are is crucial to knowing where you’re going. Take a big picture look at your bank and credit card statements, debts and savings. If you notice something you’re spending too much money on, cut it. Then figure out how much you were previously spending on that unnecessary excessive expense and automate it so that amount is transferred into your savings account each month. That way, the money goes into savings before you have a chance to spend it.
Create a Budget
If you don’t yet have a budget, now would be a good time to create one. The best way to do this is to create categories based on previous months’ expenses, then tweak it a bit if you had any expenses in your statements that didn’t align with your goals. To help you get started on your new budget, check out our online budget calculator.
Create a Plan
Now that you’ve created a budget, consider that budget part of your new savings plan moving forward. That budget should help you work toward that larger goal you created initially. From that goal, work backwards. Let’s say you wanted to save £12,000. If you make £2,500 in take-home income (roughly £50,000 a year), and save 10% each month, you’ll be able to save £250 a month and hit your goal in four years. Or, if you wanted to save half that amount and invest the other £125 into a brokerage account you can go that route. However you decide to save or invest your money, the important thing is that you create a reasonable, achievable plan and stick to it.
Learn from Your Mistakes
Slipping up from time to time when you first start saving money is to be expected. Just resolve to get back to good practices as quickly as possible. You’re trying to create better habits, so it makes sense that it can take time. So if you happen to make a few financial mistakes, just take it in stride and commit to doing better in the future.
Get Some Support
Whenever you’re attempting to make a change in your habits, it’s easier to make with the support of your family and friends. By surrounding yourself with people that encourage your savings plan, you’ll be much more likely to achieve your goals.
Reward Yourself Appropriately
Having a little bit of fun built into your savings plan can definitely help you enjoy the journey. Just be sure to budget for it and find the type of fun that doesn’t break it! If you hit a savings goal, go ahead and reward yourself with something you’ve budgeted for. As long you don’t outspend what you’ve allotted for, you can have fun and stay on track toward achieving your goals.
The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.