A savings plan is the key to success, financial happiness and freedom to have a secure future in place, not just for you but for your loved ones as well.
Have a clear idea
In order to create a savings plan, first, you need to know about what a savings plan really is and the importance attached to it. You also need to assess the financial position that you stand at. This can be done by checking your income and expenses for the past few months in your bank statements. This helps in getting a picture of the amount you can save.
For instance, if you exhaust all your money before the payday that follows, you might not be able to save a large sum of money each month. Instead, you can save small amounts like $30 or $50 every month. A savings plan gives you the scope of action that you can work on to build your fortune.
Cut down on spending
If you remove the miscellaneous or impulsive spending, you will be able to save more than you think you can. Such expenses can be excessive shopping just because you like something or getting your take-out Chinese food every day. Everything in moderation is great for both health and finances. So instead, you can do such activities for 3 or 4 days in a month, and eat healthy homemade meals for the rest of the days.
If you still cannot find the space to cut down on expenses, you can instead increase your income. This can be done by doing side hustles, selling items that you don’t use, or looking for jobs in your field that pay higher salaries. This will help you increase the scope for savings.
Use automated savings option
Savings can be done easily with technological advancements and the mobile applications and websites that are provided by every bank. According to reports, 54% of customers say that mobile applications have made it more convenient to save money.
Automated transfers will transfer the money from your account on the stipulated date even when you forget to do so. For example, transferring money from savings to a mutual fund account. This will help in growing the balance exponentially without little or no effort.
Try to increase the value of each dollar
Make sure that your savings are providing you with the maximum value. You should look for a savings account with a higher interest rate. You can have a significant balance of $10,000 but still, the account with a lower rate won’t boost your savings by much. For example, a rate of 0.05% will only yield $10 after 12 months. You should note that the national average only stands at 0.06% for the interest rate as stated by the Federal Deposit Insurance Corp.
Online banks are the solution if you want to bag those high rates. Since these online banks don’t need to maintain the physical branches, they pass on those savings to their customers. For instance, an online bank with a rate of 0.50% APY will yield 50 bucks a year. As time moves ahead, your amount and interest will be compounded and it will grow even faster than before.
Don’t forget your objective
Do not withdraw money from your savings account on whims. Remember you are saving the money so don’t dip your feet into that money from time to time for that extra shopping or eating fancy food. Temptations are to be kept at bay if you are looking to fulfill your long-term goals.
To do this, you need to keep reminding yourself of the goal that got you started in the first place. Saving to buy a house, a car, or to go on a vacation? Then you need to keep on reminding yourself to avoid undesired spending. If you want to build an emergency fund, then arrange reminders on your phone that this money is only meant for urgent use.
Once you have your savings plan in place, it is time to save as much money as possible. Saving is a continuous process; once you reach your initial goals, move on to the next one. For example, if you have saved your emergency fund worth six months, you can move on to saving for your house. A savings plan makes for a sustainable future and helps you avoid financial crises that you may face in the future. Once the plan has taken its course, nothing can stop you from financial well-being.