If I were to ask you this: How much savings do you need to cover all of your expenses for the new year, would you be able to tell me?
Could you cover that cost today without using a credit card?
If you don’t know where your money is going month-to-month, or even for the entire year, you will fail and have a higher chance of falling behind.
If you live paycheck-to-paycheck, and are trying to pay off debt, it only takes one unexpected or forgotten expense to derail your budget.
Here’s how I prepare and create an effective savings and spending plan:
1. Set specific savings goals
I determine my savings goals for the entire year before it even begins.
How?
I use a monthly calendar to help me map out the entire year.
This helps determine which holidays or special events you need to prepare for and give you an estimate of how much you need to save.
2. Write it Down
- Go month-by-month and write down on your calendar every major holiday
- Write down recurring birthdays that you spend money on year-after-year
- Write down any known occasions that will be happening. For example, if you know a friend is getting married in June, write down their wedding date on your calendar
3. Start a Savings Plan
After writing the description, write down:
- what the goal is
- the total amount that you would like to save for each goal
- how many months left until you need the money
- how much you need to save every month up until your goal due date
- the date you need the money
4. Yearly Savings Tracker
- Tracking your progress as you work your way towards your savings goals is extremely important.
- You want to be able to quickly see if you are on track to meet your goals.
- Having “saving buckets” will help with overspending and will prepare you with cash, rather than putting these expenses on your credit card.
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