A Basic Household Saving Plan
If you’re not setting aside money for future goals or emergencies, it’s time for you to start thinking about putting together a basic household saving plan. Whether you want to save for a necessity, such as a new home or college tuition, for a special indulgence, such as a pair of designer shoes or a dream vacation, or you’d just like to have the peace of mind that comes with knowing there’s a little cash on the side should an unexpected expense pop up, getting together a household saving plan can put you in control of your future finances. Even if you think you can’t afford to create a basic household saving plan, there’s always a way to find a little bit of money to put away for a rainy day so that when an emergency expenditure arises or when you see something you want to buy, you’ll be able to afford it instead of reaching for the charge card, which only puts you further behind. Here are a few tips for creating a basic household saving plan.
What You Spend vs. What You Owe
The place to begin when creating a household budget is to determine how much money you take in each month and how much money goes out. Start by adding together the total net income of your household, then list all your monthly expenses and their amounts. Some of these will be fixed payments such as mortgages, car payments, or insurance premiums. Others, such as utility bills, food and gas costs, and credit card bills may fluctuate somewhat from month to month, so do your best to estimate them. Add all your necessary monthly expenditures together and subtract them from your total net income to get your “discretionary income,” or money that’s free for either saving or spending. There are several great tools and forms available online to help you do this, such as Kiplinger’s budgeting worksheet.
What Your Goals Are
Next you’ll want to figure out what you’re saving for. If you have a specific goal and time frame in mind, such as a wedding in a year and a half or a family vacation next summer, determine how much money you’ll need and divide that by the number of months until you’d like to pay for it to determine how much you’ll need to set aside. If your goals are less specific, such as having money for emergencies or for investing purposes, try setting a portion of your discretionary income aside to place in a savings or investment account. To make this easier, consider arranging for automatic deductions on the day you get paid. Getting the whole family involved in planning and maintaining a basic household saving plan can not only be financially rewarding, it can also be a valuable lesson in fiscal responsibility for children. Include them in the goal-making process or determine an indulgence for them once the family has reached its saving goal.
Little Cuts Lead to Big Savings
If you feel you can’t afford to set any money aside, think again. There are likely many small expenditures that you can reduce or eliminate. Have everyone write down everything that they purchase for one month, from trips to the hair salon to a Saturday game of golf to a pack of gum, and then determine you can live without. Perhaps you could make coffee at home instead of buying it out, or you could manicure your nails yourself for a few months and put the money you save in an investment fund. Even small amounts will add up over time.
