No.1 Finance

6 Steps To Successful Savings Plan

by Lie Dharma Putra on 22/07/09 at 1:36 pm

No doubt; saving is the most basic [sopposed to be the easiest] way to build wealth that should work to everyone. The fact;  for many of us, it is hard to start and grow saving while we have enough extra cash to be saved? The key to building wealth successfully through savings is to have a plan. But many of us found ourselves in struggle to grow the saving up. There are many ways to accomplish this goal. Here’s a step-by-step method that many people find useful.

Step-1. Start As Soon As Possible

Don’t wait until some ideal time to start your savings plan. No time will seem ideal; you’ll always find excuses to delay another month. At some point you simply have to take the plunge. The earlier you start, the better “grip” you’ll have on your finances.

Step-2. Forecast Your Cash Flow

You should forecast your anticipated cash flow for various increments of the year. Usually, this means forecasting the year on a monthly basis. Once you determine your income and expenses, how much is left over?

Step-3. Project Monthly Savings

Start with anticipated monthly savings; then project for the entire year. This may involve averaging. For instance, if you can save $330 in February and $270 in March, you might decide to save $300 a month.

Step-4. Pay Yourself First

What this means is that on receiving your monthly salary, the very first check you write is the $300 payment for your savings. Alternatively, you may be able to arrange for an automatic payroll deduction at your workplace, or arrange for automatic monthly or weekly transfers from your checking account to your investment account.

Step-5. Contribute More whenever Possible

The $300 monthly savings amount shouldn’t be where you stop; it’s just the start. If, for instance, you receive bonuses as part of your compensation (or if you receive some sort of windfall, such as an inheritance), you should consider contributing part or all of it to your savings plan. The extra money may seem an opportunity to enhance your current lifestyle; on the other hand, it’s also a great opportunity to enhance your future lifestyle.

Step-6. Review Your Saving Plan In Regular Basis Each Year

Consistent annual review is important to maintaining an effective savings plan. Any time you choose can serve the purpose; however, you might pick the time of year during which you find out what your annual raise will be. Undertaking your review at that time will help you plan how to use your increased cash flow most productively.

Successful Saving Do’s and Don’ts

Don’t be surprised if you wind up unable to save the amount that your savings plan specifies. Most people’s actual expenses exceed what they’ve anticipated—there are always unexpected costs!

Here are some do’s and don’ts to help you save:

Don’t just sit down at the kitchen table with pen and paper and try to guess your expenses. Pull out the check register from your checkbook and gather your credit card receipts for the last 12 months. Total your actual expenses. Study them. See what the patterns are. You’ll probably find that your living expenses are a lot higher than you thought. Do write your check to your savings before you write any other check that month. However, make sure to deposit that check in an investment that’s liquid—just in case you need to pull some money back out by month’s end. Don’t get frustrated if your savings plan specifies $300 per month but you’ve only saved $100 monthly during the last 6 months. You may need a year or so to determine how much you can really save each month. Do start now—even if you can only save $10. Ten dollars per month growing at 8% per year equals $35,143 in 40 years.