How To Create a Savings Plan Anyone Can Implement and Manage
New Year, New Savings Plan, this will be the year you will be able to put money aside! Start small, you do not need to do what others do. Only do what you can do.
In this post you will learn what types of savings accounts are available to you, the information will help you decide which is best for you. You will also learn how to save money and I give you free printables to help you along the way.
- $20 per week placed into savings can increase your financial portfolio by $1,040
One of the best ways to create and grow your financial safety net is to ensure you are working towards your savings plans weekly.
Once you create a savings plan, it will be easy to implement a savings plan and increase your financial portfolio by meeting your savings plans goals.
Let the New Year Bring You New Savings, Here Is How
How much do you put away from your checks to go towards savings? 0%, 10%, 20%? Do not be ashamed or mad at yourself if you are at 0%!
Also, who cares what anyone else is doing. Focus on yourself because that is all that matters… you, how you improve your life and how much better off you will be than you were last year. This is the only thing that matters.
There are thousands who are at zero percent, since many are living paycheck to paycheck these days. Or some people need some help getting a grip on their budget so they can begin saving money.
Many think they have absolutely no money to set aside, many do, they just need some reassurance they can do it.
How much should you be putting away, and how can budgeting help?
Money is associated with stress. With the majority of individuals not saving money, or not saving enough, this can send the individual into a lot of stress, and panic.
Breath in deep through your nose and exhale ” I own you money!”
What Are The Benefits Of Having A Savings Plan and Account?
- Know exactly how much you are worth
- Know exactly where your money is
- Save for a specific purpose, like home buying, college or a vacation
- Link to your checking account to save the change directly into savings account
- Set up weekly auto deposits
- Have money readily available for emergencies
How Important is a Savings Plan?
Just about less than 30% of individuals have less than $1000 in their savings right now.
Everyone is familiar with the importance of a savings plan. It dictates what kind of car you can afford, how big of a house you can get with a down payment, what you can offer your children for college. It also dictates things like can you handle an emergency financially.
Most of the time someone will need a downpayment for a home or a vehicle, and without a savings plan individuals are stuck with high monthly payments and more stress later on with managing a high monthly bill.
Or there may be some unexpected life event that requires money to be readily accessible. Without a savings, you would be screwed. I have been there and maybe you have too and that is why you are here.
Not only is a savings plan important for monthly bills, but what if you get fired or had a medical emergency? What if the company you work for goes under? You need a way to survive until you can get a job and get back on your feet.
$1000 will not cut it. It is a great beginning, it should be your first savings plan goal to meet. After you meet it, make another goal to have three months worth of bills set aside. After you meet that, set aside six months, then nine months and at the end, ideally you should have set aside a whole years worth of bills set aside for just in case, this is your emergency savings fund.
<You can have multiple types of savings accounts, the first one to set up is that emergency fund, the next you want to reward yourself, so have a for fun savings fund too. Lastly you do need a long term savings fund for other needs.
We as a society need to remind ourselves that circumstances popup that we cannot control. I cannot control a death in the family, or a wedding, or to be let go. Honestly I would be in the same position if I acted like those that I went to high school with.
Blowing every single check on junk, and not caring about their future. As a society we need to learn to save, and I’m not talking about a 401k. I’m talking ‘short’ term goals that we can achieve in five years or less.
That’s it. Less than $1000. That is just $20 per week in a full year. Let’s start with that!
How Much Do You Save From Each Check?
There is typically a 50/30/20 rule when it comes to determining breaking up finances. This rule ensures you are saving enough money for what is necessary, and are not spending too much of your money on bills.
Many people are saving virtually nothing. So how much should you be spending? How much should you be saving? This rule takes living expenses into account too. This may become hard for high-rent cities, like my own.
The 50% Rule
The 50% rule determines how much you should be spending on bills and food. Depending where you live, this may be a difficult task. If you are spending over 50% you may want to change some spending habits.
Maybe you don’t need an hour long shower, but a 10-20 minute shower. This can save you money on your water bill. Or, instead of keeping the water running while you are brushing your teeth, turn it off! If you are not using it, that is money falling down the drain!
Maybe change the grocery store you shop at, or shop the deals and buy generic! Majority of the time generic tastes better, has less chemicals, and is cheaper too! You should check out our couponing post and our pantry stocking post as well for more assistance in those two areas.
Check out your cable, internet and even streaming services. I use Disney +, it offers various things to watch, plus gives me access to Hulu, bam, one small bill for two different streaming services. I do also have Netflix too.
For our electric and water bills, they offer different “plans” and services to lower bills like energy savers, paperless bills etc. We have also installed energy efficient bulbs and shower heads too.
The 30% Rule
Within this rule, the 30% is for all fun activities you plan to take part in. This includes the kids soccer league, and weekend dates. 30% of a check is a good amount to be put towards fun activities with the family.
The 30% is typically known as the short-term savings category. This is for short term plans that will happen within the next few months. This could be putting new tires on your car, or going to take a weekend trip up north.
You can break this up into 10\10\10 or 15\15 depending on your goals, wants and needs. We do 15% for fun stuff and 15% for short term needs.
The 20% Rule
This portion of the rule is the most important for future financial stability. 20% of every check should be put away into savings. This is the long term savings. Savings for retirement and in case of being laid off.
This is the portion that people forget about. Most of the time, individuals will choose to not save, and instead will use the other 50% on ‘fun money’.
On average, even teens can save up to 5k a year. Take an average job. Take Target for example, since they have the same minimum wage in the country. $13 an hour. Say, the teen works 30 hours a week because of college. $390 a week, $1,500 a month before taxes.
If you multiply that by the amount of months in a year, this teen will make 18,000 a year before taxes.
The teen will pay about $7,500 towards their bills, like their car, and college. $3,700 will be spent on what they desire, between Christmas gifts, and living out their college lives.
$3,300 will be put into savings every year. This is just 20% of the money they will receive in a year pre-tax.
What are you Paying too Much Money For?
When you are looking at your finances, look at your different plans such as internet or cell phone bills. Do you need unlimited data? Do you need the high end phone price?
Chances are, at one point you wanted the best of the best. This is not unusual, most of us go through this phase. We do not need to pay $150 a month for a phone that costs $50 cheaper a month.
Do you need to replace your phone every 2 years? Phones can carry a lifespan of 4-5 years when you choose to take care of it. You do not need the new IPhone, when you replace your phone, choose the older model, or the model that is about to be older, usually they will take up to $450 off the phone.
This can lower your bill at least $15-$20. This money can go straight into your savings, leaving you more money in your account at the end of the year.
As amazing as Verizon is, they tend to offer the most expensive rates. Most areas have a specific provider that works better. It may have a few more dead spots than Verizon, however the plans are very different.
Depending on the phone, you can transfer over your number and all your photos
What about cheaper brands? I know it doesn’t work for everything, but sometimes off brand items are just as good as the brand named things are.
Make it a point to buy only if there is a sale and or you have coupons to use during the purchase.
How You Should Save Your Money
There are two ways you can save money… at home in a jar or box or safe or you can open a savings account in a bank. Before you decide on the method to save your money, learn about the different ways to do so.
How Do Savings Accounts Work
It is a way to securely save money for whatever your plans for it is. Sometimes there are fees, some offer bonuses, some offer different perks and others have limitations. Learn about each kind and decide which is best for you.
Savings Money – Which Way Is Better And Why Is It Better?
In my opinion, it depends on what you are saving for and how much you plan to save.
I would keep a limited amount of cash in my house. I prefer to use a safe to keep it locked away, but also easy to access in case I needed it right away.
I would keep a larger amount in the bank though, for me it is safer.
Some people do not like banks for their own personal reasons, and that is ok, just as long as you know, understand and accept risks involved with keeping it all at home.
To decide which is better, it is more of personal opinion, but think of these things to help you determine which is best for you.
- If I keep a savings at home, am I covered in case of theft or fire?
- How much will I save at home verses in a bank account
- What are the risks, perks, pros and cons associated with saving at home or in the bank
Using a Fire Resistent Safe To Save Money At Home
If you are going to keep money at home, please do so safely. Use a fire resistant safe. You do not want to risk your money being lost in a fire or stolen easily if your home is broken into. How much you keep inside this is completely up to you.
Saving Money At Home Risks and Perks
Risks of savings money at home:
Theft and fire are the most important things to know about when it comes to keeping your money at home. Another important factor is whether that money is covered by your insurance and how much cash on hand do they cover?
Perks to saving money at home:
One of the best things about having money saved at home is if there is an emergency, it is immediately available. You don’t need to do any transfers, going to the ATM or bank, it is right there within reach.
Using a Savings Account in a Bank
You know where your money is at all times. It is covered and safe, even if there is a bank theft or fire, it is covered.
You can see how much money you have saved up. Watching your money grow is such a satisfying feeling.
Bank Savings Account Risks and Perks
Some things to consider are things like you have to go out to get your money, inflation may change, little to no interest earned on your savings. But there are also perks, find one that allows interest to be earned, access money when you want, safe keeping of your money.
What Kind of Bank To Use For My Savings Account
Traditional Bank: This allows you the most access to your money. No need to lose your password, you can speak to someone in person and some even have an app that is easy to use.This typically has the most fees because of their overhead costs.
Online Only Bank: These are still convenient, but doesn’t have the ability to speak with someone face to face. There are usually less fees associated, but also has limited access to your money.
Both kinds of savings accounts usually offer an app these days, which can be really helpful, especially if you can link your bank accounts.
What Are The Types Of Savings Accounts and How They Work
High Yield Savings Account: This is a savings account where the bank gives you a small percentage per year for keeping your savings account with them. Not all banks offer it. They can range from 2% to 2.52% APR.
Sometimes you can get a bonus, it can range from $50 to a few hundred dollars. However you may not be able to get both the bonus and the interest rate at the same time.
Online Savings Accounts: These are accounts where they use your money to lend out and they pay the bank a percentage to borrow that money. Most of the time you get higher interest rates because of this.
One of the things to know about online savings accounts is that you have a limited amount of times you can withdraw your money per month, which is usually around a total of six times per month.
Pension Account: is usually a retirement savings account that the employer sets up which pays you a guaranteed set amount when you retire.
401K Savings Account: This is a tax deferred deduction straight from your paycheck. Some people will be lucky if their employer offers matching contributions. Even if they do not, it is good to participate in it. For this type of account, you can not just go and withdraw money from it. You would have to take a penalty from withdrawing early from it, so try not doing that.
ROTH 401K Savings Account: Very similar to the regular 401K plan except it is after tax contributions, making it tax free and it can be withdrawn from easier during retirement.
IRA and ROTH IRA Savings Account: This account type allows for good tax breaks. There are limitations though, so be sure to learn about each one and select the account you feel more comfortable with. If you want to withraw money from it, you will have to pay a penalty, so try waiting until you are actually retired to do so.
What Is a Money Market Savings Account: Essentially it can double as a checking account. It usually requires a larger deposit but also offers higher interest rates.
One of the things ti keep in mind for a money market account is that it may have a cap of the ability ti withdraw between three and six times a month.
What Is a Certificate of Deposit Savings Account: This is a CD where you place money into it and you would have wait until it matures before you can withdraw from it. It usually has a fixed earned interest rate.
Savings Plan Formulas
Choose the formula that works for you. One that you can commit to weekly or bi-weekly depending on how you get paid.
- $10 Plan: If you put away $10 every week, you will have $520 at the end of the year.
- $20 Plan: If you put away $20 every week, you will have saved $1,040 at the end of the year.
- $30 Plan: If you put away $30 every week, you will have $1,560 at the end of the year.
You can start off with $5 per week or $25 per week, no matter what amount you do, it is critical to stick with that same exact amount each paycheck.
Imagine how much money you will have saved up each year…
$25 per week:
- Year One = $1,300
- Year Two = $2,600
- Year Three = $3,900
$50 per week
- Year One = $2,600
- Year Two = $5,200
- Year Three = $7,800
It may not seem like much, but at the end of each year, you have more than you did the year before!
You can even go a few steps further and take what you learned in the couponing post to add to these savings. You can also take money gifts people gift to you and put it towards savings as well. Each tax season, you can take at least $1,000 and add it to your savings accounts too.
Money Savings Tips From The Experts
Yocheved: You can adapt the familiar Reduce, Reuse, Recycle motto into money-saving wisdom. Think creatively and with focus, then watch your account plus your wallet grow fuller over time. You can bank on that. Read on for tips about the three R’s and a bonus R mentioned, too.
Merchandisers want you to buy items that bind your computer, printer, phone and other cords together to prevent tangling. Skip the ticket price and grab that no added-cost cardboard tube from the paper towels after you finish using the roll. Place your cords into the reusable tube one by one, threading them carefully. Plug everything into relevant outlets and bank the change.
Ready to ramp up your money-saving skills? Don’t trash your ratty cotton terrycloth bathrobe. Cut it into pieces with a sewing shears (borrow one instead of buying it) and clean your home or office with “recycled” custom-sized dust cloths.
Let babies suck on the soothing fabric when they’re teething. By the way, you can wipe drool off baby faces with those gentle terrycloth rags, too. When you’re feeling more ambitious, turn the salvaged fabric into low-cost quality bibs. Wipe dirty little faces, backsides and hands clean when you’re away from home, too.
Pack a few dampened squares of recycled terrycloth into seal-tight plastic bags that you can safely keep in your baby bag. Add a tightly closed sample bottle of liquid soap that you can buy from pharmacies and grocery shops, or receive in the mail.
No need to buy expensive baby wipes. Lower the cost of keeping kids clean with can-do ideas that only cost pennies and a few minutes of your time. How much money have you saved with those ideas? More than you’d guess.
Expensive disposable goods are trashing the ocean, the neighborhood, and your savings goals. Stock up on reusable and biodegradable bamboo cutlery, dishes, and serving pieces to help the environment and your savings plan. Bamboo items can minimize the problem for the earth, and leave money in your bank account.
If you don’t throw them out right away, bamboo things can usually be washed clean and reused 50 times or so. The spoons and dishes are safe for babies (knives and forks never are). If your child throws bamboo dishes to the floor, there’s no added expense for broken things.
Bamboo doesn’t shatter like real dishes. When your supply of bamboo things wears out, bury biodegradable everything in soil to nourish the earth. Or, simplify your life and toss them into trash cans without a guilty conscience.
You’ve reduced the strain of plastic disposables on the earth plus your personal expenses. Whether you use your bamboo kitchen stuff once or many times, calculate how much money you saved by not buying single-use things for your meals, not having to replace dishes that your kids broke, and not having to invest in more expensive dishes if you don’t want to.
You can even buy low-cost, high quality bamboo toothbrushes that last for months! Be sure to remove the toothbrush bristles before tossing them into the ground or your nearest flower pot. Bristles are made of nylon. They’re not biodegradable.
Reduce the clothing bills for everyone in the family by shopping in the bonus fourth “R”: resale stores. Some of them sell trendy things in excellent condition at astonishingly low prices.
Several resale shops specialize in vintage clothing that’s fun to wear. I bought a fur coat that way, and a never-worn Chanel suit with the store tags still on it! Miracles happen and you can bag a few when you look carefully in every clothing rack.
Avoid buying used shoes from resale shops, though. They can cause expensive foot problems too numerous to mention in a brief article.
Collect all the money that you save over time from your reduce, reuse, recycle, plus resale efforts and store it in one container for deposit into your bank account.
Save on expensive gas and walk to the bank with those funds. You can prevent expensive medical problems with regular exercise. Or, keep the money handy for spontaneous purchases instead of raiding your savings. Let it accumulate interest.
Keep thinking of more ways to Reduce, Reuse, and Recycle. Overall, the R’s can rev up your savings efforts.
Bill: Understanding their monthly cash flow is critical in order to save. Often, by using a simple tool such as a spreadsheet, pad and paper, or an app like EveryDollar, people can understand where their money goes each week. That often results in a ‘pay raise’ as they see areas of leakage (old or unused subscriptions, for example). The difference between income and outgo reveals the potential savings, and sets the stage for better understanding and tighter control of personal finances.
Be wary of the many apps and gimmicks to save that we’re bombarded with these days, such as those that might round up purchases and bank the difference.
Never place savings in any institution or account that’s not FDIC insured. Otherwise, if those companies go belly up, all might be lost. Make sure you get a good rate of return. Online institutions such as Ally are very customer-friendly and pay good rates. Vanguard offers insured money market funds that also pay very good rates.
When saving money at home, a good fire-proof safe is essential. Make sure to put the keys and/or combination in a secure location, and store that information with any legacy paperwork (will, last wishes, etc) just in case.
A higher return on investment than saving (especially at this time when savings interest rates are low) is to pay down debt. Entering into a long-anticipated recession with a heavy debt load is dangerous, especially as interest rates on credit cards and other debts begins to rise.
Money Savings Plans Free Printables
Savings Goal Tracker: You can print one out for each of your goals. One for a home, one for a car, one for a vacation. The point is to be purposeful so that you know exactly what you are saving for and how your progress.
Savings Challenge Printable
Personal Savings Plan Stories
My Personal Story: I will tell you about myself first. It was December of 2007, I was working, but I had lots of bills and my spending was out of control. Anything the kids wanted, they got sometime before the year ended.
I lost my job suddenly, I didn’t plan for it so I had zero savings. I know, I know, the daughter of an accountant too, she was disappointed I was without a savings plan. I was a roller coaster of feelings, since I had one before, but a move took that money and I didn’t replenish it.
I learned really fast that a savings plan and implementing it weekly is a non negotiable now.
I now put no less than $25 per week into my savings account.
Alfredo’s Story: Alfredo is a twenty three year old single man without kids. So he thought he didn’t need a savings plan. He spoiled himself weekly, he gave into his every want and need without thought.
One evening, he took himself out for a ride on his motorcycle and his whole life changed. A woman took an illegal left hand turn and he crashed right into her car because he didn’t have time to stop. He nearly died that night, he flew two lanes over, had two surgeries and spent fifteen days in the hospital.
He had no savings, recovering from a crash that just about took his life… he is now out of work for at least six months. He had to return his car which he was leasing and then come to reality of his spending and savings habits.
Alfredo learned the hard way that having no savings hurt him in many ways and left him with no car to return to once he was able to safely drive again. He would have to depend on family to help him cover bills and buy a car without payments so he can return to work after recovery,
I sat with him to help him figure out how much to place into his savings each week, he can and has made a non negotiable agreement with himself to put $50 per week into his savings account.
Jennifer’s Story: She raises two children by herself, one in child care, the other in grade school. She works in an office, living paycheck to paycheck. She came to me asking for help with her budget, she had many things come up that needed money which she barely had to use for them.
She truly had barely any money at the end of her bills to spare for a savings account that year. Her first year, she could only put $10 per week, which left her with only $520 at the end of the year. Though it was a harsh reality for her, she also learned lots that year.
She learned more about shopping clearance, using coupons, sales and deals, she also learned to put each of her purchases through a thinking process. Do I need this right now, can it wait? When does this typically go on sale, can it wait until then? She thought with intent and purpose before purchasing things.
She was able to put $25 per week into her savings account that next year, for an additional $1,300 at the end of the year.