SIX STEPS TO STARTING A SAVINGS PLAN

Fight Back – Start a Savings Plan

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Set up a budget

First, get your expenses under control so you have money to save. When you establish a budget, you should include all of your fixed and irregular expenses. If your expenses exceed your income, then you should make cuts in categories that can be adjusted until you have a little cash left over. Consider taking on a second job.

Set savings goals

Consider what you are saving for and how much you want to save to accomplish your goals. Typically, saving for an emergency fund and for retirement should be top priorities. Most experts recommend setting aside 15 to 20 percent of your income for retirement. While this sounds like a lot, investment vehicles such as 401Ks and IRAs that let you invest with pre-tax money can make it easier. You should also set a goal of saving three to six months of living expenses in an emergency fund.

Devote to your savings goals monthly

Think about how much extra money you have left over each month as well as where your saving priorities are. In many cases, it is better to start small with your savings amounts so that you can adjust to the change in your spending.

Open one+ savings & retirement account

You can establish a different savings account to cater to each of your short and long term goals, such as one account for your emergency fund and another for fun activities. Then you will be better able to monitor your progress with each of your saving goals. You should never touch the money in your designated savings accounts except for the purpose you have the money set aside for (so no raiding the emergency fund for vacations).

Make your saving automatic

Once you have determined how much to save towards each goal each month, you should automate the process so that you don’t have to always make the responsible choice every time you get paid. If you make a commitment to saving, set up direct deposit or auto debits from your bank account into your savings account and retirement funds. That way you won’t have to think about it and the money will always go where it should.

Gradually increase how much you save

As you get used to living on a little less because you are putting cash aside, you can gradually increase the amount that you are saving. You can also choose to save all raises and bonus money since you won’t miss the extra cash if you never get used to spending it in the first place.

By choosing to follow these basic steps, in the same way your parents, and grandparents used these time tested strategies, you should be able to be successful and create a savings plan that works for you and allows you to build a healthy nest egg over time.

Summary

Citation

SIX STEPS TO STARTING A SAVINGS PLAN, Lifeopedia LLC, 2019: http://www.lifeopedia.com/fight-back-start-a-savings-plan/