7 Steps To Starting Your Own Savings Plan
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Personal Finance
By Justine Mann
August 18, 2022
Money is one of the most intimidating topics to talk about, especially if you think you’re pretty bad at handling it in the beginning. Just think: if you’ve been living paycheck to paycheck for the past few years, making bad financial decisions, doesn’t a saving plan feel a bit out of place?
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Maybe you’re staring in your bank account and feel like it’s not going anywhere, or maybe you’re not doing that well financially and you feel like there’s no way to get out of the hole that you have dug yourself into. But have some patience — this article will help you start your own saving plan.
Decide how much you’d like to save.
When starting your saving plan, decide how much you’d like to save. This is important as it sets a goal for you to follow, making saving feel more achievable. Once you have decided on an amount, set up an automatic transfer to be sent from your bank account into a separate account.
You can also set up an automatic withdrawal from your checking account if you don’t have a savings account. This way, your money will never even see your checking account and you won’t be tempted to spend it – it goes straight into a separate savings account, which we’ll discuss later!
Calculate your monthly budget.
To start a saving plan, you need to calculate your monthly budget and figure out what you spend on, and how much you spend. The first step is to figure out how much money you have coming in each month and how much money you’re spending on things like rent, food, utilities, and other bills.
This will help you figure out what your “big” expenses are—things like rent or mortgage payments, car payments, etc. The goal here is not to be able to save every single penny that comes in—the goal is simply to make sure that every dollar makes its way toward building wealth!
Create a separate savings account.
Saving money is easier said than done. Just like with any other goal, it requires a plan and a lot of self-discipline. The first thing you should do is create a separate savings account. This helps you stay accountable with yourself, and puts your money in a safe place where you can’t easily use it.
Next, set up an automatic transfer from your checking account to this new savings account every month. If you want to make it even easier on yourself, do the transfer on payday so that you don’t even see the money leave your checking account at first—it’ll just go right into your savings without any extra effort or thought on your part.
Pick up a side hustle.
One of the best ways to save more money is to make more money – so pick up a side hustle! A side hustle is an additional job or activity that you do outside of your regular work. It can be anything from pet-sitting, selling on eBay or Etsy, freelance writing and editing, or selling your skills as a tennis instructor.
You can make some extra cash by picking up a side hustle and putting it in your savings account. It’s important to think about what type of job you want to do and how much time you want to spend doing it before deciding. You should also consider whether or not you have any special skills that could make you attractive as an employee or contractor.
Cut back on luxuries.
If we’re being honest with ourselves (and we should be), we all want things—pretty things, nice things. In fact, sometimes we want them so badly that we’ll spend more than we can afford just for the pleasure of owning them… and then regretting it later. So what does this have to do with saving?
It means that if you want to start saving money, you have to make sacrifices—and it may hurt a little bit at first. But if it’s not really a need—if you don’t need an expensive pair of shoes or an expensive car or an expensive gadget—maybe you need to cut back on luxuries if you want to save money.
Negotiate for better rates for bills.
If you’re trying to start saving money, one of the first things you should do is negotiate for better rates on your bills. Paying less on your bills will help you save more money, however little, every month. Once you do, you’ll notice that all these little savings add up!
Start by looking at your utility bills and other monthly expenses. Are there any ways in which you could reduce these costs? Check your accounts for any subscription services you have, or any recurring payments you have to make. If you can cut back on some subscriptions, that’s money in the bank!
Use cash back rewards credit cards, but stay disciplined with them.
Cash back rewards credit cards allow you to earn cash back on every purchase you make. The amount you earn varies depending on the card, but it’s usually between 1% and 5%. That may not sound like much—but if you use this card for all of your purchases (including groceries), by the end of one year you could have earned hundreds of dollars in cash back.
But here’s the catch: this isn’t free money! It is still a loan, so don’t go out and spend it all right away. Instead, pay off your balance every month using automatic payments from your checking account or savings account—and then just keep saving! You’ll earn even more interest on top of what you’re already earning from your cash back rewards card!
Key Takeaway
Now that wasn’t so bad, was it now? Starting a savings plan is key to saving money in the long term, but it isn’t always easy. With some habits in place and a little history under your belt, though, you’ll be well on your way to success. All it takes is a bit of discipline and some hardcore Excel work.
Just don’t abandon your plan after a few weeks if you have an unexpected expense. Stick with it for at least six months to see how it works for you—your finances will thank you for it. And when you finally find a flow that works for you, make sure you share this article so others can do so, too!
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