Statistics have shown that most Americans don’t have enough savings in their accounts. In fact, more than half of the American population can’t cover emergency expenses without taking a loan. What is even scary is that quite a few have enough a savings plan for retirement.
Irrespective of your definition of financial freedom, creating a great savings plan and following it religiously goes a long way in helping you achieve your financial objectives. When you put away specific amounts of money into a savings account, you are bound to benefit from the power of compounding in the long run.
If you can manage to acquire a car or a home by paying small but consistent amounts of money, you can also build a reliable savings fund through the same method. The importance of savings can’t be overlooked. Besides, even chipmunks save nuts in their burrows for nourishment during winter.
Determine Your Financial Goals
Before you set up your personal financial plan, you must chart the course to know where you are headed. If you are like most people, you wouldn’t hit the road for a long cross-country trip or go shopping for groceries without a clear plan. However, most people tend to overlook the power of a savings plan in their lives.
When you have a clear and concise definition of the objective you want to achieve, the chances of success increase significantly. The best way to do this is to define a specific amount of money along with the time you must achieve the financial goal. For instance, you may be intending to save about $40,000 for your child within a timeframe of 15 years.
Basically, it’s easier to achieve a specific savings plan than it is to hit an abstract target without specific amounts and timelines.
Save To Build An Emergency Fund
To get out of the camp that can’t afford to take care of emergency expenses, you need to grow a sufficient emergency fund. Emergency expenses have a way of sneaking on you and when this happens, it’s quite easy to neglect other important bills and financial obligations. However, most people are quick to take out a no credit check funds to cover the expenses.
An emergency fund is meant to give you a soft landing in the event where some unforeseen expenses come up.
Experienced financial advisors have constantly stated that you need to have some cash that can cover about 3-6 months without straining. As you plan to get your savings plan off the ground, it’s important to figure out the exact amount you need for your emergency fund. Only then can you be able to decide on a specific amount that you’ll save on a monthly basis.
To make things easier, you can set up automatic payments into your account and maintain the momentum until the goal is achieved. Irrespective of your target amount, it’s important that you start implementing the savings plan immediately. Basically, there are few financial planning actions that are better than having some cash stashed away for a rainy day.
Make A Commitment To Live Below Your Means
The importance of living below your means can’t be overemphasized but it’s one of the wisest decisions you can ever make if you intend to become financially secure. To have a smooth savings experience, you need to master this aspect of personal finance.
The fact that it’s the basic step that makes it possible to have some extra cash dictates that you take it seriously. What’s the use of tons of cash if you’ll have exhausted it on recurrent expenses before end month?
When you teach yourself to consistently live below what you can afford, you have made a huge leap towards financial freedom. However, if you haven’t developed this skill by now, you might find it quite uncomfortable especially if you are used to buying things on impulse. Nevertheless, this doesn’t mean you can’t master the skill.
Today, you can decide to be frugal in all areas of your life in order to safeguard your financial future. In addition, you’ll be more accomplished as a parent if you passed the same values to your kids and set them up for success at an early age.
Diversify Your Sources Of Income
Unlike in the past when the job market and economy were stable, today things are different and the current stability is limited. As such, you have to create safety measures to help you survive in the event where one source of income runs dry.
If you work full-time today, it’s important to find ways to create a sustainable side business. This ensures that you have enough money to contribute to your savings plan and also pay your bills. Besides, it creates a financial buffer and gives you a peace of mind just in case you lose your job.
If you own a business, strive to find out other ways of investing in additional sources of income. If possible the new source of income should be different from your current business.
Create A Budget That Matches Your Financial Objectives
When you are creating a personal budget, the first step is to understand how much money is flowing in and out of your account. To begin with, figure out how much you are earning on a monthly basis.
The second step is determining your expenses and you can do this by gathering your receipts as well as credit card statements. The objective here is to identify the items that are taking up a large portion of your expenses and see if there is anything you can do to lower the expenditure.
Try to see if there are unnecessary expenses that can be completely eliminated from your budget. Priority is given to essential expenses like food, transportation, health, and debts if there are any. Basically, the purpose of a budget is to help you understand your income and expenses so that you can figure out the most appropriate way of maximizing the available finances and contribute to your savings plan.
Savings Plan – Final Words
Creating a savings plan is one of the best things you can do for your financial future. However, like most good things, there is some difficulty involved especially if you are used to spending your cash without a plan. The best thing is that you can start today and build a stable financial future that won’t be easily shaken irrespective of the prevailing conditions.
If you are interested in even more savings-related stories and information from us here at Bit Rebels then we have a lot to choose from.