A savings plan is a great way to help you save for a goal or learn how to be more disciplined with your money. It doesn't have to be hard or complicated to have a savings plan. In fact, you can set up a savings plan that will automatically transfer your desired amount into a savings account at regular periods (weekly or monthly for instance).
The majority of online savings accounts offer this service free of charge because it doesn't cost them anything for you to click a few buttons on their website. Many financial institutions offer incentives to help your savings plan work harder for you such as bonus interest for no withdrawals. Make sure you choose the right amount of money for you to regularly save when you set up a savings plan.
To begin your savings plan you should start with drawing up a budget. By looking at all of your outgoing expenses you will be able to get a better understanding of where your money is going, how you can cut back and areas where you can save.
Setting up a budget
- Where is your money going? Write down all of your outgoing expenses including phone bills, rent, electricity, credit cards and everyday expenses like food and train tickets.
- Where is your money coming from? Make a note of all your income streams including, wages, investments, pensions or child support payments.
- Assess essential and non-essential expenses. What outgoing expenses are essential and which can you possibly cut-down on or cut-out completely? Do you need that gym membership when you have the equipment at home? Can you pack your own lunches instead of buying them every day?
- Work out a budget for all your outgoing expenses and stick to it. If you budgeted $100 for food each week, make a note of all the money you are spending on food and don't go over it.
- Re-assess your budget regularly to reflect any changes to your financial situation.
If you do well and stick to your budget you should find yourself with money left over at the end of each month. Use this money to implement your savings plan by putting it into a high interest savings account or investing it.