Saving Your Way
I write about saving often because it really is important. As important, is finding the saving strategy that works for you. Everyone is different and what works for one, definitely will not work for all. The idea is to find what works for you best so that you're setting yourself up for success.
I have been a big saver for as long as I can remember. There was never a time in my youth or adulthood where I wanted to spend every dime I had to my name. It's just something I never fathomed. Maybe it was fear of not having or just the comfort of having. I'm not talking huge sums of money, but from a young age, I realized the importance of not spending it all. I'd save change that someone had given me or money earned from being rewarded for a good report card.
When I finally started working (McDonald's - Age 16, minimum wage) I tended to save most of each check. The amount I allocated for myself was easily less than 25% of what I brought home. In numbers, a $130 check meant about $30 for me and the rest into my first bank account. I was young, I didn't have any expenses so in my mind I didn't see a reason to spend all of my earned income. I also had planned on going to college and I would need money (thinking ahead). Over time, this just became the norm. This stuck with me for life even as I went on to other jobs. As responsibilities increased, there was more to manage, however, saving was always a priority. While I could no longer save 75% of my earnings, I never stopped saving what I could.
Another strategy I picked up in recent years was the 52 Week Money Challenge. If you're not familiar with it, it basically sums up to this: for 52 weeks (1 year), you save 1 dollar more each week. Week 1, $1, Week 2, $2, Week 3 $3, etc. By the end of the year, you would have saved $1,378 with the highest week costing you $52. It proved to be a simple and fun way to save. Instead of increasing by $1 a week, I decided to increase by $2 weekly and called it my vacation fund. This increased the savings to $2,756 for the year. I would say that is a very generous vacation fund, and granted the most I'd contribute during a week would be 104, that's not bad. The fund can be for whatever you want: new furniture/appliances, down payment for car fund, down payment for a house fund (or house fund), holiday fund, family vacation fund, etc. Some have shared with me how they use the money challenge to fund accounts for their children. Such a great idea!
While that strategy works for me, that may not be true for others. Maybe it's too much to keep up with. Maybe it's too frequent and you would rather just contribute a fix amount monthly. That's fine too. How you do it and how much you contribute is not important. What is important is making saving a habit and making it fun, if possible. Make it into a challenge, a game, a friendly competition even. While I did not create this challenge, I share with everyone because I truly believe it's an easy way to get started. Think about it, in January, you start week one with one dollar. Yes, one whole dollar. You got this! Some may even start with $52 and decrease by a dollar each week. Whatever floats your boat.
Do what works for you! Stay true to yourself. Never compare yourself to others. Everyone's situation is different, expenses are different, income is different. Respect that and start somewhere. Having a little something saved will never be a bad thing. Spending and never saving is not the way to go.
I have been a big saver for as long as I can remember. There was never a time in my youth or adulthood where I wanted to spend every dime I had to my name. It's just something I never fathomed. Maybe it was fear of not having or just the comfort of having. I'm not talking huge sums of money, but from a young age, I realized the importance of not spending it all. I'd save change that someone had given me or money earned from being rewarded for a good report card.
When I finally started working (McDonald's - Age 16, minimum wage) I tended to save most of each check. The amount I allocated for myself was easily less than 25% of what I brought home. In numbers, a $130 check meant about $30 for me and the rest into my first bank account. I was young, I didn't have any expenses so in my mind I didn't see a reason to spend all of my earned income. I also had planned on going to college and I would need money (thinking ahead). Over time, this just became the norm. This stuck with me for life even as I went on to other jobs. As responsibilities increased, there was more to manage, however, saving was always a priority. While I could no longer save 75% of my earnings, I never stopped saving what I could.
Another strategy I picked up in recent years was the 52 Week Money Challenge. If you're not familiar with it, it basically sums up to this: for 52 weeks (1 year), you save 1 dollar more each week. Week 1, $1, Week 2, $2, Week 3 $3, etc. By the end of the year, you would have saved $1,378 with the highest week costing you $52. It proved to be a simple and fun way to save. Instead of increasing by $1 a week, I decided to increase by $2 weekly and called it my vacation fund. This increased the savings to $2,756 for the year. I would say that is a very generous vacation fund, and granted the most I'd contribute during a week would be 104, that's not bad. The fund can be for whatever you want: new furniture/appliances, down payment for car fund, down payment for a house fund (or house fund), holiday fund, family vacation fund, etc. Some have shared with me how they use the money challenge to fund accounts for their children. Such a great idea!
While that strategy works for me, that may not be true for others. Maybe it's too much to keep up with. Maybe it's too frequent and you would rather just contribute a fix amount monthly. That's fine too. How you do it and how much you contribute is not important. What is important is making saving a habit and making it fun, if possible. Make it into a challenge, a game, a friendly competition even. While I did not create this challenge, I share with everyone because I truly believe it's an easy way to get started. Think about it, in January, you start week one with one dollar. Yes, one whole dollar. You got this! Some may even start with $52 and decrease by a dollar each week. Whatever floats your boat.
Do what works for you! Stay true to yourself. Never compare yourself to others. Everyone's situation is different, expenses are different, income is different. Respect that and start somewhere. Having a little something saved will never be a bad thing. Spending and never saving is not the way to go.
Possible Strategies:
- Save the same amount each week or month:
- Depending on how often you are paid, you may find it easier to allocate a predetermined amount each pay period. Having it automatically taken from you check and placed in a savings/checking account makes this even easier. Out of sight, out of mind!
- Try with a small amount to build the habit for a short time and then increase based on your comfort level.
- Examples: $25 a week, $50 bi-weekly, $100 a month.
- Income - Minus Expenses then Save
- Another strategy is to look at your annual net income, calculate fixed expenses (rent, car loan, etc.) and work with the difference. You'll still variable expenses, but the key is to then determine how much you'd like to save over the year (percent or actual amount) and divide by 12 to determine monthly.
- Example: Say you bring home $35,000 (after taxes) your rent and expenses total $15,000 that year. This leaves you $20,000. Out of that, you determine you'd like to save $2,500. That's roughly $200 dollars a month.
- Pay Yourself First
- Simply put, after you've paid the bills and handled your responsibilities, make it a priority to save something. This could mean saying of however many dollars you have left after taking care of all affairs "I'll put x amount or x% into savings". Then have your fun with whatever is left.
- Treat it Like a Fixed Expense
- Set up auto payments, write a check, or make the transfer.
- Set a calendar reminder so that you get a notification that the "Savings Bill", "Vacation Bill", etc. is due.
These are just some ideas that you can use to help with brainstorming. The message here is to make saving a priority. Do what works for you, but do something!
Visit mymoney.gov for more on Saving.