Whether you’re looking to gain financial independence, prepare for retirement or purchase a big-kid toy, you’ll only get there through one of two ways: an effective weekly savings plan or winning the lottery. However, planning to win the lottery doesn’t fall under the heading of “fiscal responsibility,” so you’ll need to resort to building out an easy-to-follow savings strategy. When equipped with the right money-saving tips, you can start the journey to get your savings plan on-course today.
How to Reach Your Savings Goals
Step 1: Calculate your goals
You can never get anywhere if you don’t know where you’re going. While this might sound like a commonly known fact that goes without saying, it’s actually the crux of any effective weekly savings plan. Before tackling money-saving challenges, you need to take a few minutes and figure out exactly what your savings goals are.
While “I just want to save money,” or “I need money for retirement,” are positive thoughts, they don’t meet the criteria of an effective goal. Money-saving goals need to be specific, measurable, and attainable. In this context, that means you need to identify what you are saving for, determine the amount you need, and set a timeline of when you want to achieve that.
Here are a few sample savings goals, though of course, yours will depend on your particular circumstances:
- “I want to save $1 million by the time I am 55 for my retirement.”
- “My goal is to save $100 a month for the next 12 months to buy a new phone.”
A great place to get started is with a savings calculator.
Keep in mind your goals need to be realistic, and your plan is one that you can stick to. Todd Krantz of Krantz Financial and Insurance Services says, “When setting your savings goals, it’s important to use a plan that plans for the future while still allowing you to enjoy the present, so you stick with it. It’s not always about the amount when you start but making it a habit. Once it’s a habit and balances start to grow, people tend to get excited and tend to do more.”
Step 2: Make sure your savings will accrue interest
When we were kids, we kept our savings in a piggy bank. While this seemed like the safest play at the time, we were too young to know our money was actually shrinking thanks to inflation. The new toy we wanted slowly got more expensive as the economy grew, but our money supply stayed the same. As a child, the effects of this were minimal. As an adult, however, this is one of the money-saving challenges that can’t be ignored.
The adult version of a piggy bank is an actual brick-and-mortar bank. Unlike our childhood piggy banks, these financial institutions will pay us for the right to hold onto our money in the form of interest. Make sure when you’re choosing a banking account to put your savings into one that earns interest. Not only can this interest help to protect you from inflation but at times it can help you to make money.
You’ve probably heard financial experts use the phrase “make your money work for you.” This is what they’re referring to, and it doesn’t take intricate investment knowledge on your part to get in the game. Great options to get started are high-yield savings accounts, CDs, and money market accounts.
Step 3: Set up automatic transfers
One of the biggest money savings challenges is the sheer act of remembering to put aside money every paycheck or every week. Schedules get hectic, unforeseen financial needs pop up, and frankly, a lot of us have what seem to be more pressing issues on our minds.
Thankfully, technology has gone a long way to simplifying this process and removing the need for you to remember to stick to your weekly savings plan. How do you accomplish this? Once you’ve picked out an interest-bearing savings account, set up automatic transfers from your checking account into your savings account. One of the best money-saving tips is to set these recurring transfers up the day after your paycheck comes in. By doing this, you ensure you won’t be tempted to spend the money, but you also make sure the money is in your account for the transfer.
Step 4: Track your progress
A weekly savings plan can seem like a big hurdle when you first get started. There’s nothing rewarding about looking into an account and only seeing a few bucks. However, as you start to build the discipline of overcoming savings challenges (or let the automatic payments do the work for you), that account will start to grow. If you’re tracking your progress, you’ll start to see these victories and the fruits of your labor.
Tracking your progress is not only important for the mental victories, but it’s also important so you know if you’re making effective progress towards your goals. You should track four things: your weekly contributions, your record of sticking to your plan, what (if any) money savings challenges caused you to deviate from your plan and the percentage of your total goal you’ve achieved.
Armed with this information, you can routinely make decisions on whether or not you need to adjust your weekly savings plan or your discipline safeguards.
What’s the best way to track your progress? Savings and finance apps are a fantastic resource to help keep you on track. Some of the top options include Mint, Acorns, and Every Dollar.
What is the 52-week Money Saving Challenge?
Ready to turbo-charge your savings plan? Looking for a way to slowly roll into the process? The 52-week money saving challenge is an incredible tool to help new savers. The premise of the plan is simple. In the first week of the year, you put $1 into savings. In the second week of the year, you put in $2. This continues throughout the entire year until you’re putting $52 in the last week.
Doesn’t sound like much? Well, at the end of the year, without even taking interest into consideration, you’ll have $1,378 in your account. It’s important to point out that while this plan operates on the yearly calendar, it doesn’t have to be started in January. You can make today the first week of the 52-week money saving challenge and start by moving that dollar over into an interest-bearing savings account right now.
It is important to note, this is only one method of saving. Traditional savings plans work just as well at overcoming savings challenges. It’s all about what works best for you.
What is the 50-30-20 Rule?
For those of you looking for a faster-paced weekly savings plan (but one that’s still easily attainable), you might be interested in the 50-30-20 rule. Not only does this plan take care of your savings, but it also gives you an overview budget for the rest of your life.
Here’s how it works. For every dollar you bring in (paycheck, investments, a poker game with friends), you put 50% towards your needs, 30% towards your wants, and 20% towards your savings. So, if you make $100, $50 goes towards things like food, rent and utilities, $30 goes towards things like entertainment, fun and hobbies, and the remaining $20 goes towards your savings.
The success you see from this program will vary based on how much money you’re bringing in. Its flexibility makes the 50-30-20 rule an awesome one-size-fits-all savings plan. You’ll want to refine your budget a bit more, but this gives you a general overview of your spending and saving.
The main drawback of this plan is what happens if you’re living life on a tighter budget. What happens if your expenses come out to more than 50% of your income? While this plan will work for some, it might not be a great fit for everyone.
The Final Word
Overcoming money-saving challenges may seem like a tall task, but with the right steps and money-saving tips, it won’t be. Remember, even small steps in the right direction count. And in the world of weekly savings plans, the sooner you start those steps, the better off you’ll be in the future. Today is the day to take control of your life and your finances, and it can all start with $1.