A core building block for achieving financial freedom is a strong savings habit and having good saving strategies. When you put money away, you are saying, “I am planning for my future and I’m taking control of my money.”
How much you save can vary depending on your income. Figuring out a saving amount to put away each month is possible — no matter the size of your paycheck.
Are you ready to take control of your finances?
Whether you are able to put aside 10% - 20% - 30% out of your income, you should try to start multiple savings buckets depending on how much income you are able to set aside. I am breaking down the three types of saving buckets everyone should have.
Remember its a marathon - not a sprint. Start out with what you can manage and build from there. A good rule of thumb when trying to figure out how much to save is to have at least three to six months of expenses which can help to ease any financial obstacle that might come up like a medical emergency or losing your job.
SAVINGS AUTOMATION - Set up split deposits to have automatically deposit a percentage of your paycheck or a set amount direct-deposited into a savings account. With a recurring transfer, you can usually set an amount to be moved from your checking account into your savings account and then set the frequency of this transfer (1x-month, 1x-week etc).
DID YOU READ THE 1st POST??
YOUR HOMEWORK: Download & fill out the Financial Building Blocks worksheet! This is your worksheet to help track your income & expenses and identify where your money is going? Head to this post to download the worksheet!
3 Savings Buckets to Setup
I tend to group my savings into 3 different buckets depending on potential life issues or obstacles that might arise. Keep these 3 buckets in mind when you are developing your short-time, mid-term, and long term savings goals.
This is your most important savings bucket! You should always be putting money away for unexpected expenses. There is a saying “hope for the best and plan for the worst”, you never know when an unexpected expense might pop-up!
Types of emergencies to save for:
♦ Lose Your Job
♦ Car Accident
♦ Pet Vet Bill
♦ Tax Bill
♦ Unexpected Healthcare / Dentist Bill
2. LARGE PURCHASES
Part of building your wealth is financial planning for core milestones that you want to achieve as you build your career.
Types of large purchases to save for:
♦ New Car
♦ New Home
♦ Saving for a Baby
♦ New Electronics (Television, Laptop etc)
Now, this is the most "unsexy" of the group - but one of the most important! Savings for your retirement doesn't seem like a big deal initially - but those savings really add up over time. It's better to start sooner than later!
Types of retirement accounts to contribute to:
♦ Individual Retirement Arrangements (IRAs)
♦ Roth IRAs
Savings Tip: The amount you can contribute to your 401(k) or similar workplace retirement plan went up from $19,000 in 2019 to $19,500 in 2020.
I am also breaking down 2 different savings scenarios based on annual income. I will show you how savings add up over 10% - 20% or 30% of your income into different savings buckets in the Financial Savings Worksheet!
DOWNLOAD IT BELOW↓
FINANCIAL PLANNING & SAVINGS WORKSHEET:
Your homework this week is to download the Financial Planning & Savings Sheet. I break down key savings terms to know and show you the impact of putting money aside and how that breakout looks at a monthly and annual level.
Review these key savings terms and start planning your short-term and long-term saving goals. Map out your savings strategy with these key buckets. Having different savings buckets can help ensure you are saving for the right milestones.
*BONUS* - I am sharing 3 different savings breakouts on page 3 and figure out how you can apply it to your own financial situation.
Do you have any extra questions about saving strategies? Let me know in a comment below!
I am also launching a Facebook Group! This group will not just be about finance. This group is all about bringing together like-minded women who want to build their careers, tackle their finances, and look fabulous while doing it!
A lot of you wanted a place for us to engage more as a community. I will be sharing exclusive content, PDF Downloads and there will be weekly interactions for people to ask questions, recommend skincare products, and just help each other. Remember, knowledge is power!
Make sure to subscribe so you can follow along with the Financial Series.
Next week we will be discussing how to 50-20-30 rules of setting your Budget!
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