No matter where you are on your life journey, it’s never too late or too early to learn how to start a savings plan, or to get your savings plan back on track. For recent college graduates, accepting your first job is a great time to start thinking seriously about how you are going to save for the future.
Follow these 6 steps to learn how to start a savings plan that will work for you.
The first step of starting a savings plan is to assess your debts and what you owe. Do you have college loans? Rent or a mortgage? Car payments? What bills are you responsible for? Taking stock of what you owe will help you decide how aggressively you want to save in order to start building your savings for the future.
If you’re newly employed, your first taste of financial freedom can lead you to spending your hard-earned paychecks. Creating a list of what you need to have to live comfortably will help you stay on track to your savings goals and away from impulsive buys.
You may have already set up automatic payments for things like your cell phone bill, Internet and your credit cards. But did you know that you can also set up automatic savings plans? You can schedule automatic transfers of cash from your checking account into savings at the same time once a month or after every paycheck so you don’t even have time to miss it. Make sure to plan these transfers so you have enough in your account to cover your expenses, then sit back and watch your savings grow.
Now that you have regular transfers going into your savings account, it’s time to decide what you’re saving toward. This doesn’t have to be a specific purchase, but rather could be a certain amount you hope to reach by a designated date, a level of financial freedom, paying off your debts or other milestones. You will likely find that as you continue to save and get closer to reaching your savings goals, you will be motivated to set new benchmarks.
As you continue to build your savings, you can start dividing your money into segments. These may include a vacation fund, home improvements, emergency savings and more. Even if you aren’t actually separating your money, knowing how much is in which segment will help you work toward your dream vacation or bring you peace of mind if you were to need your emergency money.
It may be tempting to start allowing your earnings to build up in your checking account as you start hitting your initial savings goals. But it’s important to keep setting new goals or creating new segments (self-care, anyone?) to continue along your savings plan.
If you are just starting out or have a solid savings plan already in place, our FutureTrack team can help you reach your savings goals. Our FutureTrack website can help get you thinking about how to save for the future, so check it out. And when you’re done, come in and see us – we’ll discuss your goals and help you learn how to start a savings plan for your financial journey.