If you want to get a jump on your financial management for the new year, you will want to create a savings plan that you can follow throughout the year to meet your savings goals. By making your savings plan before the year even begins, you can take into account any major, non-monthly expenses you’re likely to face during next year and adjust your savings rate accordingly. Here are some simple steps for creating an effective savings plan.
Make A List Of Savings Goals
The first step in creating a good savings plan is having a list of saving goals to aim for. The goals can be any expense that you believe you will be paying for during the coming year, such as summer camp for the kids, property tax bills, vacation funds, or making a down payment on a car. Make a list of potential goals and then whittle them down into which ones are the most important to you to achieve in the next year.
Calculate The Cost
Be realistic about how much you will need to save to meet each of the savings goals you have chosen as the most important. Remember that many goals may have additional costs that are not immediately apparent at first glance, such as food costs for vacations or gasoline for traveling. If you have done something similar in the past, use those costs as a beginning benchmark for your new calculations.
Budget Out Your Income
Once you know how much money you will need to meet your savings goals, you will need to create a budget that will allow you to reach your goal. Be aware of any deadlines that may be a part of the goal, such as a June deadline for summer camp or a September deadline for a birthday trip. It will be easier to meet your savings goals if you put away the same amount every month towards your goals. For example, you could be putting away $200 every month to cover everything on your list.
Stick To Your Plan
Sticking to the plan that you have made could be the hardest part of the entire process. It is tempting to divert money for other desires or change your goals for a faster reward, but you will be happier in the long run if you stick to your original plan and aim for the goals that you thought long and hard about when you created the plan. The only reason that your plan should change is if your goals have to be altered dramatically out of necessity or you find it impossible to save the amount that you planned to save.
Execute your savings plan by setting up a payroll deduction or have your checking account debited and transfer the money into savings. The next move is to invest a portion or all of it so it will grow.