Everyone has personal goals they want (or need) to finance. But not everyone plans for them. Maybe you want to take your family on a big vacation. Or maybe you have family in another country you hope to visit at some point. Whatever the goal, it’s a good idea to make a savings plan. Here are three tips to get you going.
Calculate your needs
Whether you are planning a family trip, saving for your children’s college fund or planning to buy a home, you must research how much money you need to meet that goal. Planning a trip: Go online, visit a travel agent or hit your local library to research how much your trips will cost. Consider air travel, car rentals, hotels, food and entertainment. The same goes with any goal – figure out how much it’ll cost so you know how much you’ll need.
Find savings opportunities in your budget
The key here is to create a budget to save your required amount of money. Put aside additional money after paying your bills each month. For help check out AARP’s budget and savings calculator to discover how much your savings can add up when you reduce your spending and find ways to lower your expenses.
Here are some ways to increase your savings:
- Do you use a grocery savings card every time you shop? Look at your receipt and see how much you saved. Put that amount aside for your goal.
- Can’t get enough of that Caffé Americano you buy every morning? Make a strong cup of coffee at home and save the three bucks or so (that’s around $15 a week right there).
- Take lunch to work instead of buying it.
- Review your cable, phone and Internet service to see if there are ways to cut costs. Comparison-shop if that’s an option.
If you’re honest with yourself about “needs” versus “wants,” there are lots of other ways to cut everyday spending. Check out AARP’s tip sheet on cost cutting.
Set up a way to save
Sure, you could sock money away under your mattress or in your favorite hiding place, but a bank account is a better plan. Why? Because access to the money is a step or two harder than just reaching into your cash box, and you can set up automatic payments into it.
If you have a bank account, go to your bank or go online to set up a separate account that can serve as your savings account. Then, ask to have a specific dollar amount transferred into your new account. Set up weekly transfers, even if it’s just $5 or $10. It will add up quickly.
If you don’t have a bank account, seriously consider setting one up. The Federal Deposit Insurance Corporation (FDIC) protects checking and savings accounts, so if something happens with the bank, you won’t lose your money. In fact, since 1933 when the FDIC was established, no one has lost a single penny of his or her insured accounts. To learn more about this protection, head to www.fdic.gov.
Those who don’t plan for goals often don’t achieve them. Many make matters worse by getting into heavy credit card debt when they finance that trip or major purchase on plastic. Avoid pitfalls and start planning today.
- Identify your financial goal, and estimate how much you’ll need to achieve it.
- Find the money to save in your current budget. Use AARP’s budget and savings calculator to see how small changes in spending can add up to big savings.
- Set up a bank account for your goal, and automatically transfer money to it on a regular basis. If you set up weekly transfers, even small amounts will add up quickly.
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