Ep #55: In this episode, let’s talk about making a plan for our savings goals. Now if you are starting to cringe because savings is not your love language, I totally hear you. Spending money is much more fun than putting my hard earned money into a savings account and letting it sit there. In fact, if you were to give me $100 right now and give me a choice to deposit it into my bank or spend the entire $100 at Target, I would 100% go to Target and happily spend it.
We all know that savings is definitely an important part of our financial journey so on today’s podcast, I want to give you some tips on how you can put those savings to good use in 2023.
What I wanted to talk about today is planning your savings for the entire year. The reason to do this is because it will allow to slowly save a certain amount of money every single month for important life events that happen in the year. For example – birthdays, anniversaries, school uniforms and supplies, family trips, Christmas and so on. Not only does this eliminate the stress of having to come up with the money the month of or the month before the event happens but because you have already budgeted and planned ahead for that money, it will be guilt-free.
When we started implementing this strategy, it was a game changer for our budget. We no longer felt money stressed during the holidays because we knew we had the money saved in the account. It eliminated the money fights and we actually looked forward to the events instead of cringing because we had to put it on our already maxed out credit card and pray that the credit card company would push the transaction through. It made us excited to take that saved money out of the bank account and freely spend it however we chose.
So I want to give you four tips on how you can implement this strategy into your budget without breaking the bank.
The 4 things you need to do to plan your yearly savings goals:
1. Make a list of all the events happening throughout the year
2. Give each event a set amount that fits within your budget (and just know that you can always increase the amount if you make more money)
3. Add the total for each month and then the yearly total so you’ll know how much you need to put away each month
4. Store it in a bank account that is separate from your main checking and savings account. This will help you to treat it like a bill and you won’t be tempted to dip into that account.
That wraps up this episode for our Back to Basics Money Series. Also if you want tips on how to improve your finances this year, you can grab my free guide at https://www.budgetdivas.com/fivesteps.
It will outline the tips we have covered in our Back to Basics Money Series plus give you quick action steps that you can start doing right now.
If you have enjoyed this episode, would you be so kind and leave a review on Apple Podcasts? I’d love to hear from you. Until next time, keep moving forward one step at a time.
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Welcome to another episode of the Budget Divas podcast. We are back in our Back to Basics Money Series. This is episode #3 in the series. If you missed the first two episodes, I would highly encourage you to listen to those as we discussed how to get organized with our finances and how to stop living on a shoestring or rice and beans budget.
In this episode, let’s talk about making a plan for our savings goals. Now if you are starting to cringe because savings is not your love language, I totally hear you. Spending money is much more fun than putting my hard earned money into a savings account and letting it sit there. In fact, if you were to give me $100 right now and give me a choice to deposit it into my bank or spend the entire $100 at Target, I would 100% go to Target and happily spend it.
But we all know that savings is definitely an important part of our financial journey so on today’s podcast, I want to give you some tips on how you can put those savings to good use in 2023.
The first step is to save $1000 as a starter emergency fund. You’ve probably heard the financial experts talk about starting an emergency fund to save for a rainy day. Now $1000 is not a lot of money but it does help to cover those small emergencies that you might run into. There will be a time when you get a flat tire, an unexpected outpatient medical bill, or need to pay for some other unexpected costs. Having $1000 as a small fund will help to cover those costs.
But what I wanted to talk about today is planning your savings for the entire year. The reason to do this is because it will allow to slowly save a certain amount of money every single month for important life events that happen in the year. For example – birthdays, anniversaries, school uniforms and supplies, family trips, Christmas and so on. Not only does this eliminate the stress of having to come up with the money the month of or the month before the event happens but because you have already budgeted and planned ahead for that money, it will be guilt-free.
When we started implementing this strategy, it was a game changer for our budget. We no longer felt money stressed during the holidays because we knew we had the money saved in the account. It eliminated the money fights and we actually looked forward to the events instead of cringing because we had to put it on our already maxed out credit card and pray that the credit card company would push the transaction through. It made us excited to take that saved money out of the bank account and freely spend it however we chose.
So I want to give you three tips on how you can implement this strategy into your budget without breaking the bank.
1. Make a list of all the events that happen throughout the year in the corresponding month. So for us, February is our anniversary month, April – July we have birthday celebrations, and November and December are months where we start to buy Christmas presents and things for other holiday activities. You can either get a calendar template online or create a calendar on paper to map out the events for each month. In addition to birthdays, holidays, and anniversaries - also include other necessities that you pay for on a yearly basis. Maybe your kids are in sports and every June you need to pay for registrations and uniforms. You might be planning to take a trip sometime this year and will need to include that in your yearly plan as well. To go even further, if you are taking a trip, break down the costs. When do you need to buy the tickets, book the hotel and car, pay for any other expense before you go on a trip. Break it all down and write it in the month that it needs to be paid. This is not only pragmatic but it also trains your brain to plan ahead and stop worrying about it.
2. Now that you have all the important events logged in the paper calendar you’ve just created, the next step is to give each event an amount. So for example birthday celebrations. Write down how much you want to spend for each person and this means a gift plus the cost of a meal celebration and decorations if need be. This step will probably take extra time to figure out how much you want to spend on each person but this exercise will also allow you to stay within budget when you do decide to get a gift and where to take the recipient out for lunch or dinner. But what I want you to remember is if you have a limited budget, the amount of the gift and the meal celebration needs to be within your means. It doesn’t mean that you love or care for the person any less and it’s important to take the guilt out of it. Plus you can always change the amount later if the event is not happening for a few months. Say right now you can only afford $25 for a gift but you really want to spend $50, you can always find ways to make more money down the line. But this exercise is to get you into the habit of planning ahead and being intentional with your choices. It also forces you to look hard at your budget and be real with yourself. Instead of treating the birthday recipient to an expensive dinner, perhaps you can come up with a way to cook a really good meal that will be enjoyed by everyone. So go through each event on your paper calendar and intentionally assign a dollar amount to each of those events. Remember to use actual numbers that fit within your current budget and if you happen to make more money before the event happens, you can always re-evaluate your savings calendar and increase that amount.
3. The third tip is to add up the total for each month and then add up the yearly total. For example, your total for February might be $200 while your total for July might be $500. Then I want you to add a cushion to the yearly amount. It’s totally up to you what that number is and make sure that it fits in your budget. We want to make sure that we have a little buffer just in case so that we are giving ourselves some breathing room in case of inflation or extra costs. So after you have your monthly and yearly totals, now you can see how much you’ll need to put away in savings each month so that you have the money stashed away when you need to use it. For example, Christmas is 10 months away but maybe you start shopping in November. Take the budgeted number you decided to spend for Christmas this year and divide it by 9. Then you’ll know exactly how much you need to save every single month to reach that goal. Do the same for the other categories so that you’ll know how much to put away each month for that event. Treat this like paying a bill every single month.
4. The last tip is where you will be storing your savings. I highly recommend having it in a separate bank so that the account is not linked to your everyday checking and savings account because it will be easier for that savings to grow when it is out of sight out of mind and to set up automatic transfers. I personally love Ally Bank and Capital One 360 which are both online savings accounts that pay a higher interest rate than your local bank and automatic transfers are completely free. So you can set up automatic transfers every single month to go into an online savings account (which is also FDIC insured) and then withdraw the money when you’re ready to use it. The cool thing about these two companies is they have sub accounts so you have one main account but you can break up your savings goals into 10 different buckets. You can have a bucket for Christmas, birthdays, anniversaries and so on. If you want to learn more you can check out Allybank.com or Capitalone360.com. I have no affiliation with any of these companies but I always like to share this tip with my audience because I’ve been using them for years and it is a total budget game changer.
To recap, the 4 things you need to do to plan your yearly savings goals:
1. Make a list of all the events happening throughout the year
2. Give each event a set amount that fits within your budget (and just know that you can always increase the amount if you make more money)
3. Add the total for each month and then the yearly total so you’ll know how much you need to put away each month
4. Store it in a bank account that is separate from your main checking and savings account. This will help you to treat it like a bill and you won’t be tempted to dip into that account.
That wraps up this episode for our Back to Basics Money Series. Also if you want tips on how to improve your finances this year, you can grab my free guide at https://www.budgetdivas.com/fivesteps. It will outline the tips we have covered in our Back to Basics Money Series plus give you quick action steps that you can start doing right now.
If you have enjoyed this episode, would you be so kind and leave a review on Apple Podcasts? I’d love to hear from you. Until next time, keep moving forward one step at a time.