It’s Finance Friday! Eek! I’m so excited! Being healthy is about so much more than being active and eating well. It’s about making healthy decisions in all areas of your life…which is why I’m writing about one of my favorite topics: Personal Finance. I truly believe that this is an important topic, and I hope you’ll read along!
Have you seen the yearly savings plan that’s floating around on the blogosphere? Basically, for 52 weeks (one year), the plan encourages you to save progressively one dollar more each week. So, for the first week, you save $1. Then for the second week, you add $2 to the saving, etc. On the last week of the year, you put away $52, and you find that you have a grand total of…less than $1,400.
The shocking thing for me is the response that this little idea has gotten. People love it! They think it’s the greatest thing ever!
Now, I am all about saving money. Really, I am. So, if all you can save in one year is $1,400, then you are doing very well to save that. But, what can you really get if all you’ve saved in a year is $1,400? It’s not enough for a car. It’s not enough for a vacation. It’s likely not even enough to pay a month’s living expenses. I’m going to go ahead and suggest that if you live above the poverty level and modify your spending just a little, you will be able to save more than $1,400 in a year. And I’m going to give you some sage advice on how to do so:
1. Choose what you want to save for. This is an important key for saving. Why? Because it’s motivating. If you have something in mind that you’re saving for, you start to imagine the possibilities. You get excited as you see your savings growing, because you know specifically what those savings are going to get you. It’s even suggested that you should start to plan specifics around what you’re saving for. For example, instead of saving for a house, start imagining what that house will look like, what neighborhood it will be in, etc. The more you can make the savings meaningful to you, the better. In the case of Husband Saign and I, we have 3 main savings goals: a house, a car, and vacation.
2. Set specific monthly savings goals. Make a commitment to your self and your spouse (if you have one) about specifically how much money you will save each month towards each goal. Factors going into these savings goals should include what you can reasonably afford to put away based on your income, and what you’ll need to have saved in order to actually proceed with purchasing the items that you’re saving for. For example, we put more than twice as much into house savings as we do into vacation savings, because houses are a lot more expensive than vacations! We also increased our savings goals after I got a raise.
3. Set up separate bank accounts for your savings goals. This is done so that you stop thinking about that money that you’re trying to save as part of your disposable income. Kind of “out of sight, out of mind” for personal finance. I also recommend setting up separate accounts for each of your savings goals. This is helpful because it takes a lot less organization on your part. All you do is put your monthly goal into each account each month. If you just had one big savings account, you would have to record somewhere how much of the money in that account was meant for vacations, and how much was meant for buying a speedboat. It would get a bit messy. Avoid that mess by having separate accounts for each savings goal.
4. When you get your paycheck, pay your savings accounts before you pay your bills…or spend money. I don’t actually really follow this one, as we keep ourselves on such a strict budget that I don’t have trouble coming up with the money to put in my savings accounts. Nor do I spend the money before I get a chance to save it. BUT, if you are one who is at risk for spending money that you intended to save, the recommendation is to get the money into your savings accounts immediately after receiving your paycheck.
5. Stick with it! Sometimes saving money is not easy, but the extra peace of mind that you will have if you’ve got a good savings plan in place is priceless.
Are you good at saving money? Any saving tips to add to these 5?
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8 comments
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Ed
March 1, 2013 at 9:48 am (UTC -7) Link to this comment
Awesome pointers! Have you been watching my finances? lol Those are the same things I do…and it always works!
runfundone
March 1, 2013 at 6:17 pm (UTC -7) Link to this comment
I have not secretly snuck into your bank account, BUT I give you the gold star of financial awesomeness for doing these things!
Kristy @ Kristy's Health Revolution
March 1, 2013 at 9:48 am (UTC -7) Link to this comment
Awesome! I love that you do a Finance series! I did a bit of a Finance series on my blog a while back, but I’ve kind of run out of topics to talk about. I found your blog via Meghann’s bangs post, I clicked over to see your bangs (very cute, by the way)
Yeah, the 52 days of savings plan doesn’t seem very ambitious — I’m guessing that it maybe is geared more towards students? I know that when I was a student, saving that much money was a big deal, but I wasn’t making very much, either. Now that I’ve got a real salary and a partner with a real salary we try to be more aggressive. Right now, we’re trying to get our house downpayment as big as possible so we put away about $400/month while we’re house hunting. We’ve managed to sock away quite a bit! After we get into a house, I really want to start contributing towards a Roth IRA. We can each put in $2k a year and borrow against the principal w/out any tax penalties. That means, in three years if we’ve each contributed the max, we can borrow up to $12k against it (for home repairs or emergencies) without being penalized. Also, by the time we’re 65, we’ll have saved $800k towards retirement!
I’m all about having that retirement taken care of!
runfundone
March 1, 2013 at 6:16 pm (UTC -7) Link to this comment
Hi Kristy! Thanks for stopping by! I’m super into finance and budgets and saving, but in so many ways I’m new at it. (Partly because I’ve only been out of graduate school for <2 years, which, as you mentioned, can affect one’s ability to save money!) We’re with you on focusing much of our savings on the house goal. I set our goal big for this year, but now I’m likely going to be furloughed, so we might have to reduce our expectations a bit. Way to go with all your great saving and financial decisions!
Tasha @ Healthy Diva
March 2, 2013 at 10:51 am (UTC -7) Link to this comment
I like the idea of saving an extra 1400 a year. I am actually pretty good at saving. We try to save 800-1000 every month if we can swing it. Sometimes it is less, but we always put money into savings no matter what. Our savings saved our butt this year on taxes. Hello, new tax bracket….I hate you!
Alicia
March 2, 2013 at 7:08 pm (UTC -7) Link to this comment
I haven’t heard of the 52 week plan, but I dig it. I’ve been doing the $5 savings club, which is alright, but I don’t carry cash enough to make it super effective at saving a large amount of cash. It will add up for food money on the next vacation though!
I am one of those people who has a savings pile for everything; vacation, new car someday, house, education stuff… I would have many more accounts if it wasn’t overkill. I like things organized and in their place!
Jac @ Challenged & Running in the Bike Lane
March 3, 2013 at 9:38 am (UTC -7) Link to this comment
Eeek…this reminds me I need to enroll in the Christmas savings plan. I am not so good about saving money and I really need to be better about it. I’m so thankful you wrote this up!
Meghan
March 3, 2013 at 11:14 pm (UTC -7) Link to this comment
I think these are all great tips, and ones that we use a lot as well. We budget through Mint, which has worked really well for us. Mint helps us to see exactly where our money was going (which was pretty shocking when we started using it a few years ago). We also try to save for specific goals (house, vacation) and I am trying to pay off my student loans as quickly as possible. While it hurts to make those big payments, I will be very glad to have them paid off. I am excited to read more about finance posts!