How to Save for a House, Car, Retirement, or Wedding
Welcome to our new guest contributor, Alexandra from Real Simple Finances. Enjoy Part 2 of the Roadblocks to Saving Series
Part 2 – Roadblocks to Saving Series; Not Planning Ahead
If you’re reading this blog, you probably already have a budget, or are trying to learn how to manage your money better. After all, what’s better than knowing exactly how much money you’ll have leftover to spend on yourself after all the bills are paid?
Now, if you just smiled and nodded in agreement, we need to talk. What’s left over every month isn’t for you to spend! I was in the same frame of mind at the end of 2012. What I decided to do changed the way I think about finances, and it changed my life.
In addition to factoring in non-traditional side hustle ideas like selling a service on Fiverr, I decided to plan how much money I would save. The results were shocking.
I’m going to share some of my findings with you today, in the hopes that you can also start planning your savings methods! And, the methods of saving are the same for a house, a car, retirement, or a wedding!
1. I opened a Holiday Club account at my bank.
My husband and I decided to set aside $20 a week for our Christmas gifts. At the end of the year, we have way more than we need — $1,040 to be exact. Our plan is to use some of it for Christmas, and to allow the remainder to be used for birthday gifts throughout the year. This planned saving protects us from overspending over the holiday, and eliminates January buyer’s remorse.
2. If you have animals, don’t forget to consider their emergency needs.
My dogs are a part of my family. Not having money to cover an emergency procedure is unthinkable to me. We save $20 per week for the dogs, or $10 per animal. We do not use this money to buy dog food or to pay for routine vet visits. This is, quite simply, an emergency fund for our dogs.
3. We analyzed our savings needs, and planned our emergency fund from there.
How much money do you need to save to have 1 month of expenses saved? 6 months? A year? When do you want to have that emergency account fully funded? These are all questions you need to ask yourself when planning how to go about saving.
Let’s do some math for a minute: Let’s say your goal for an emergency fund is $5,000. You want to have that saved up within a year. By dividing 5000 by 12, you realize you have to save about $417 per month to reach your goal. You could also divide your $5000 goal by 52, and you will see you have to save $96.15 per week to reach your goal. I’ve already reached my emergency fund goal, so I aim to contribute $50 each week to keep up the forward momentum while I focus on other debt.
4. I’m thinking about a new (to me) car.
Last winter, I got into a small accident because my car couldn’t stop on a hill. I refuse to subject myself to potential danger, and I will be doing something about my car situation. I’m looking for an All-Wheel Drive SUV that will make me feel safe when driving alone, but more importantly with the children I babysit (and my own children, when that happens!). Because I know a new car is in my future, I am setting aside extra money when it comes to me. That way I won’t have to take out a loan when the time comes.
Right now, I’ve planned to save $90 each week. Depending on how much you make, this could be a large portion of your paycheck, or a laughable sum. When is the last time you frivolously spent $90, though? I can do that pretty easily on one trip to Wal-Mart! Instead of allowing myself to spend the pennies remaining after my mortgage and utilities are paid, I have “already spent” the $90 that is divided across my accounts. It is not counted as available money, so I don’t spend it. In this way, I keep my finances in check!
Don’t miss, Part 1 - Roadblocks to Saving: Not Treating Yourself (Sometimes)
Alexandra is the owner of Real Simple Finances, where she writes easy finance tips for real people. In addition to fighting off student loan debt, Alexandra is a university English Instructor and will be graduating in May, 2014, with her Master of Arts.
Do you have planned savings goals every week? What items do you save for?
image credit; cat fanpop google images