Being able to save is often a luxury in the current day and age. If you are in a position where you can save a consistent amount, the best way to go about it is through a Monthly Savings Plan. But how does one go about creating and designing this?
Create a budget (And stick to it!)
Only once you have tracked your monthly spending is it possible to develop a strategy. This is a vital aspect of saving. Once you know how much money you require every month to “survive” through the month makes saving a lot easier because now you can “pay” yourself first every month. Whether that means putting your money into the stock market or your emergency fund, if you remove the resistance between you letting go of the money and putting it where you planned it to go. Only then can you successfully stick to a monthly savings plan?
Tell me how to save already.
Once you know how much money you need for your bills, food, rent, or anything else you must pay every month, you know how much money you have to support your lifestyle. This can include purchasing “something nice,” take-outs, or financing your shopping sprees.
Now you have your spending money for the month. Take that number and divide it by 4. (There are four weeks in a month.) That’s the amount of money you can “carelessly” spend a week. Try your best not to go over this number. It requires a bit of discipline, but nothing more than you can handle.
When you get to the end of your week and haven’t spent all your spending money? Well done! That now goes into your savings. It’s a new week and you have “unlocked” a new “treasure” of cash.
It’s the last week of the month.
This is where things start becoming more challenging. Half your week’s spending money and put it into your savings accounts. It’s the end of the month, everyone’s budget is a little sticky but instead of being at the end of your financial line you are doubling down on growing your savings while living the same as everyone else.
Some tips to succeed:
The Tomorrow Rule:
When you go out window shopping, the dopamine you receive from “buying” new items isn’t from the purchase itself; it’s from the anticipation of the purchase. You can get the same good feeling without going home with the thing. To make sure you genuinely want something – make sure to wait a day if you still want it. Then, by all means, go ahead and make the purchase. This should help you cut now on a lot of impulsive purchases.
Money or Item:
When you do decide to go to the stores to pick up the item you saw yesterday. Ask yourself, “If someone gave me a choice between this item for free or the equivalent value of cash, which one would I choose?”
Often, we forget that a dollar saved is a dollar earned. How many purchases would you swap for the equivalent value in cash? If you want to feel the power of this rule truly. Once you go back to the store and decide that you would rather have the money, transfer that amount of cash into your savings account. Doing things like this, you will see the numbers on your saving account screen increase quickly. Once the momentum starts, it becomes way easier to stick to this.
So, what do you think? Are you trying out this monthly saving plan with your next month’s pay check? If you do, DM us on Instagram or Twitter and let us know how it went.
Before making a financial decision, consult a registered financial advisor; this is not advice but merely noting our experiences.