Creating a savings plan is a great way to secure your financial future and prevent the need to borrow money. A savings plan can help you set money aside for more expensive things, such as a new car, your children’s education, and your retirement.
Creating a savings plan is a great way to secure your financial future and prevent the need to borrow money. A savings plan can help you set money aside for more expensive things, such as a new car, your children’s education, and your retirement. It can also provide you with emergency funds if you were ever injured, became ill, or lost your job. While a savings plan may sound good as a concept, it may be more difficult to put into action.
Below are several unique ways that you can start a savings plan today, no matter what your age is.
Save Your Change
Many people start a savings plan by keeping all of the change they collect throughout the year. This works best for those people who use cash to make all, or most, of their payments. You can start by getting a big jar to store you change in. Then every evening empty your pockets or wallet and put all your change into the jar. When the jar is full, take it to your bank and make a deposit directly into your savings account. Many banks offer a coin counter machine, but you can also wrap your coins before making a deposit.
Round Up What You Spend
If you do not use cash, you can still use the same system as listed above. Instead of saving coins, round up all of your purchases to the nearest dollar and transfer the additional portion to your savings account. This method is a little more time consuming because you have to figure out the change you would receive on each purchase. In addition, make sure that your bank does not have a limit on how many times you can transfer between accounts throughout the month. If your bank does not have a limit, then make a transfer every evening on the amount of change you would have received during the day if your were using cash. You will be surprised how quickly your savings account starts to add up over time.
The Envelope System
Many people use the envelope system to control their spending and save money. You start by creating a separate envelope for different categories in your budget, like housing, food, clothing, entertainment, transportation, and savings. Each time you receive a pay cheque, you place a set amount in each envelop, according to your budget. Then you can only spend that amount for each category during the month. Once your envelope is empty, you have no more money to spend. You can only take out of your savings envelope for real emergencies.
Multiple Bank Accounts
If you do not like to carry cash around, you can follow the same plan as the envelope system but with multiple bank accounts. This will require you to keep track of each account separately, but can be very good at making sure you stick to your budget. You may want to use a system that includes bank accounts and envelopes. For example, you may want to keep money for your housing and savings in the bank since it may be easier to track and make payments, and then keep an envelope for other expenses like food, entertainment and transportation. The idea of this system is to help you stick to your budget and not spend money you do not have in any category.
52-Week Savings Plan
The 52-week savings plan will help you save a total of $1,378 in just one year. It is quite a simple plan to follow. You start by putting aside just $1 the first week of the year. The second week, you need to set aside $2 for the week. This amount increases by one dollar each week, until your reach $52 on the last week of the year. Without making any additional payments and not including any interest you may accrue if you keep this amount in the bank, you will save $1,378 in a year. See the chart below for a week by week blueprint.
All of these plans offer a great way of saving money each month. You may want to just keep this savings in a special account for emergencies or use it to make larger purchases, like a household appliance, car or even a down payment for a home. Once you start a savings plan, it is important that you stick to your plan on a permanent basis. This will allow you to save more money and eliminate the need to borrow money in the future.
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