Starting a Savings Plan
A savings plan can be one of the most powerful ways to protect yourself and your family against bankruptcy. A savings plan is more than just money for a rainy day. If you find yourself out of work or facing unexpected expenses, a savings plan or emergency fund can give you the financial resources you need to survive until you can turn things around.
Unfortunately, many people decide not to start a savings plan because they assume that they don’t have enough money. This is simply not the case. There are many ways to find those extra dollars to save:
1) Create a budget.
Do you know where your money goes? For at least one week, use an app or a piece of paper to write down every expense you have and every purchase you make â€” from a stick of gum all the way to your phone bill. Once you know where your money goes and how much you spend on everything, create a budget. List how much you need to spend on rent, mortgage, food and other items. This will give you a sense of how much you have left over at the end of the month to save.
2) Start by trimming one or two expenses during your month.
Could you cancel a subscription? Could you let go of a service you don’t use? Trim out the excess spending in your budget, and you’ll have enough money to put away for an emergency.
3) Find the best savings account you can.
Not all savings accounts are the same. Look for an account with the highest interest rate possible and the lowest bank fees. Compare banks and shop for the best deal to help your money grow faster.
4) Make it automatic.
Have money deducted automatically from your paycheck and put it into a savings account â€” before you can spend it. If you have a traditional job, your payroll department should be able to set this up for you. Your bank can also set up automatic savings for you. Youâ€™re less likely to spend money if itâ€™s going into a savings account automatically.
5) Review your savings plan.
Every few months, take a look at your savings plan. Would you be able to trim your expenses further so that you can put more money into savings? Is your plan still working for you? Could you simplify your life to have more money to save? Your savings plan should be growing and changing as you do. Once you get the hang of saving, you might be inspired to save more and more.
The important thing is to start as soon as possible. Stop telling yourself that you canâ€™t and start saving today. Even if you can only set aside a few dollars today, starting now gets you into the savings habit and lets you build that emergency fund â€” before you need it.