You may think that saving money is easy. However, it requires constant planning and a major change in financial decisions. More often than not, an unexpected event will put your budget in disarray. If you’re serious about saving, then you should create a list of options or reasons that can fuel your savings account.
Here are some basic ideas you can try:
Rainy Day Fund
You probably heard about the old adage that you must have three months’ worth of savings. This is a sound strategy that can prepare you for emergencies.
Start with living expenses. Add up three months’ worth of rent or mortgage payments. Look at your utility bills and add three months’ worth of each to the total. For more variable bills, like electricity and heating, use numbers from the more expensive months in your calculations. Use receipts and bank statements to find out the typical costs of monthly groceries and supplies.
College is one of the costliest endeavors that you’d encounter if you’re a family person. This is the reason why you need to get a proper headstart in savings whenever possible. Saving for college, however, should probably be on the lower end of your priorities, well behind building up an emergency savings account and saving for retirement. Thanks to the ready availability of financial assistance and tuition loans, it isn’t a necessity to have funds saved up in advance. Bide your time for college education expenses, and always keep your income level above the waters.
Home or Property
You can now buy a home or property with little cash on hand. Over the years, you have to grind hard to repay the value of the home. Without getting too bogged down into the science of mortgage rates, the more you can bring to the table as a down payment, the better off you’ll be. A sizable down payment means more initial equity for you and less risk for the lender, which can help you get more favorable terms.
During your golden years, you must have a financial stash that you can use. All over the world, the average age of retirement is 63. Life expectancy is currently 78.8 years. If you play your cards right, you’ll have decent savings to see you through the golden years. If possible, you should work with a retirement counselor so you can make the right plays.
One good angle that you can adapt for your savings is the ‘journey mindset.’ The act of saving itself is a journey, and you must fill it with positive things and actions. Save a specific percentage per month, and do your best to multiply your income sources.