Growing a savings fund should be a high priority for virtually anyone in the world. This could be money set aside for an emergency, or enough cash to tie you over during a difficult period of income. While it can seem confusing at first, adding to your savings account can be a lot easier than you might think. Here’s exactly how to create a budget and savings plan for the future.
1. Track Your Income
Start by adding together the total amount you make each month. If you have a stable job, this should be pretty straight forward. For those who are self-employed or make irregular amounts monthly, taking an average of the past year is a good place to start. Knowing your total earnings will allow you to accurately divide your income.
2. Work Out Your Expenses
Think rent, utility bills, any debt repayment and the cost of food. Anything that is regular cost should be incorporated into the total amount of your monthly expenses. Once you’ve got this number, you can subtract it from your total earnings to see how much money you have available. However, in most cases, not all of this leftover money will be put into a savings account.
3. Set Some Aside For Fun
While saving is a priority for many, having fun should be too. Whether you enjoy dining out, visiting the pub or going to local attractions, ensure you have enough funds to do so. At this stage, you could also consider holding some money to pay for a vacation. If you like to invest parts of your income, this should also be factored into your budgeting plan.
4. Make Realistic Goals
As we touched on previously in this article, saving 100% of your leftover income each month is sometimes not feasible. Setting realistic goals is important, as this will only encourage you to continue over time. When creating a budget and savings plan, most people aim for about 60-80% of their available income to be added monthly.
5. Monitor Your Progress
Consider using a spreadsheet to monitor how much you save each month, or just keep a tally in a notebook. See if you are keeping up to date with your budget and savings plan, and don’t be afraid to make necessary adjustments. If you can never seem to hit the goal set previously, think about lowering the amount to make it achievable.
To further your efforts, consider utilising some unique ways to save money every day. This could include things such as sharing transport, minimising utility bills or even choosing a new bank. Every step you can take towards you goal will help greatly in the long run.
How To Create A Budget And Savings Plan
Utilize the above steps to create a basis for your budgeting and savings plan. You could consider setting aside a few minutes at the end of each week to ensure you are staying and track. It’s also important to remember that making necessary adjustments will help to keep you motivated and focused on further growing your savings fund.