Anyone that has tried to create a sound financial budget or has at least heard that it is good to have one knows that a savings plan is critical to any financial budget. It is critical to have savings plan in place regardless of your goal. You may want to have a saving plan for a vacation in a few years, savings for retirement or college funds, or simply to have emergency cash on hand in the even of unexpected expenses. Many people know they need to have a saving plan, but have no clue where to start. This article will provide some basics to creating a good financial budget that includes saving.
First find out what you need to save for and how much it will require. For long-term goals like retirement, you will need to do some planning and probably talk to a planner or investor. For short-term goals, you simply need to know how much it costs and how you can put aside money away weekly towards that goal. Do not buy what you do not need. It is that simple. Learn how to distinguish between what is a need and what is a want. You NEED a roof over your head; you do not NEED a new video game. Set a savings goal. Once you know how much you need to save, decide on your timeframe – I may have a down payment for the house two years from today. Be realistic, not idealistic.
You then need to decide how much you will be saving every week or every paycheck. It is best to put aside the same amount each period. Don't forget to pay yourself first. Saving should be your priority. Deposit your savings into an account as soon as you are paid. You can even set up an automatic transfer with your bank so that you won't even miss the money. Keep a record of your expenses. This is all part of your financial budget. Later you will be trying to decide what to trim out of your overall spending.
Reassess your savings plan. If you simply cannot fit all of your savings goal in one finanancial budget, cut more from your overall plan or extend the timeframe. Maybe you will need to put off the house purchase for another year for example. It is important to write out your financial budget on paper and keep it somewhere you can see it every day. Once you have balanced your earnings with your savings goal, you can see for yourself how much you are spending and exactly where.
Stick to the budget no matter how hard it is. If you stray from it, it loses its point entirely and you will be back to square one in debt with no savings in no time.Open a high interest saving account. It is much easier to keep track of your savings if they are far away from you and separate from your spending cash. Get it at the same bank you do your checking and this way you can simply transfer from your checking to savings at your alotted weekly or bi-weekly time to do so. Whatever you do, don't use your credit cards. This is the quickest, though most difficult way to reduce spending. Use cash as much as possible as you will then be more aware of what you are spending your money on. If you simply must have credit cards, but them in a tupperware box with water and store it in the freezer. Thaw your card only when you really need it. Your card will not suffer damage, and you will force yourself to use cash until an emergency arises.
If you receive unexpected cash like a bonus or inheritance, put all or most of it in your savings. Once you have met your obligations for a car or house loan, you will have extra money. Put that into savings, and this way the money you used to pay someone else now goes to you.
In this day and age of credit and debtloads, it is very difficult to stick to a solid savings plan. If unexpected expenses cause you to stray from your budget from time to time, do not stress about it. As soon as your unexpected expense is out of the way, resolve to yourself to get back on track as soon as possible. These simple tips can be started today, and within one year you will have a solid savings account, and a very sound financial budget.