There comes a time in most of our lives when we need a large amount of money for something. It could be for something small, like a new television, or it could be large, like sending your child to college. No matter the reason, it would be better to accumulate that money over time, rather than trying to find it when you need it. This is where a savings plan comes in handy. You can add a little bit to it each week, and when the time comes to spend it, the money will be there waiting for you. If you are looking to start a savings plan, this short guide should be able to help you out.
1. Plan – The first thing you are going to want to do is plan out your savings plan. You want to know just how much you are going to need to save up, and how long you have until you need the money. Try and make these goals as specific as you can. Creating vague goals will make it more likely that you will give up on it.
2. Calculate – Now that you have a total in mind, and know how long that you have, next you need to do a little simple math. Figure out how many weeks it is until your deadline, then divide your target savings goal by that number. This is the amount that you will need to save up every week in order to reach your goal. Already you should be feeling a little better, as it is much easier to put that smaller amount away each week rather than trying to find your target goal amount all at once when the day arrives.
3. Budget – Just because you have a small amount that you need to put away, doesn’t mean it will be easy however. For those of us on a tight budget, finding extra money each week is easier said than done. To find this money, you are going to have to analyze your monthly budget. Take a look at all of the things you spend money on, and look for anything that you can cut out or cut back on. Take any extra money that you find and put it towards your weekly target.
4. Set Up – With the money available to put away, you need some place to put it. We recommend opening up a separate bank account and having the funds automatically deposited each week. You can set it up so that the weekly amount you chose is withdrawn from your original bank account and sent right into your new savings account each week. This way you don’t have to try and remember to put it in. Another benefit is that you can easily forget about it, and when the time comes to use the money, you’ll be pleasantly surprised at how much is in there.
5. Leave It – Now all you have to do is stick to your plan. If you followed the advice above, you don’t have to do anything besides leaving the money alone. It can be tempting to use the money before you planned, so you are going to have to fight that temptation. Remember why you are saving the money up in the first place, and keep that goal in mind whenever you are tempted to withdraw it early. If you can do this, you should have no trouble keeping up with your savings plan. Your future self will thank you for it.