Are you saving for a particular goal? Whether you want to build up a down payment on a house, plan a big anniversary vacation, send your kid to college, or just improve your financial health, a good savings plan is vital for success. Here are five steps to build a solid savings plan.
1. Protect the Money. Even if your goal is relatively small, avoid just stuffing it under the mattress. Doing so would not protect it from loss or theft, and you might use it for other things. Instead, place it in a dedicated banking account in an institution covered by federal bank or credit union deposit insurance.
2. Automate Additions. Use the bank or credit union's tools to create an automatic transfer into the account on a regular basis. Automatic additions are more likely to be regular and in the right amount because you take your own decision-making and immediate needs out of the process. For possibly a better result, ask your employer to have a portion of your paycheck deposited there each payday.
3. Limit Access. The harder it is to access this savings, the less likely you will be to use it for other purposes. Limit your own access by requesting that no debit card or checks be issued for the account. And avoid linking it to any overdraft accounts or as a backup payment source for anything. While you can still access the money in an emergency, the extra work will ensure that you rarely do.
4. Use Investment Tools. Talk with the financial institution about tools for short-term investing as your savings builds, so you can boost your returns. Most banks offer Certificates of Deposit, for instance, which are safe investments with a time limit and a higher rate of return than an account. Yours may also offer limited stock and bond investment services for particular types of savings accounts.
5. Check In Regularly. Stay on top of how your savings is growing by checking in and ensuring that there are no surprises happening within the account. Seeing the amount go up will also help motivate you and boost your morale. You may even be able to use use bank tools to calculate if you're on track or need to make any adjustments.
As you follow this path to success, you're sure to see more results and faster than without a plan. And then you can focus on what you'll use the money for and all the benefits it will bring.
Share22 July 2020
As I see it, one problem with most budgeting programs is that they don't account for the "real life" factor. Anyone can tell you not to spend anything and to save everything, but when it comes to feeding your kids or dealing with a medical emergency, most budgets get thrown out the window. I realized that this was a problem, so I decided to start focusing on budgeting for real life. I decided to forget everything that I knew about budgeting and started working with a clean slate. This blog is all about budgeting for real life and knowing how to spend your money the smart way.
