Updated: Jul 24, 2020
Different ways to develop a successful savings plan without having to change your lifestyle.
Here at Mulligan Financial we not only help you erase your debt we also teach you how to keep your income. Like the great Robert Kiyosaki once said, "it’s not about how much you make it how much you keep."
Pay Yourself First
Most people pay the stores, the restaurants, the bars, the online shopping and all the other entertainment activities there is to do before they even think of paying themselves. The most important person to have your money is you, you earned so you should be able to keep it. Here are some ways to help you get on the right track to paying your self first.
List savings as a fixed item in your spending plan. You are less likely to spend money you already have earmarked for savings.
Use automatic savings methods. Set up an automatic transfer from your checking account to a savings account each month.
Save all or part of a certain type of income. Designate your tax refund, annual bonus, tip money or proceeds from garage sales to savings
"A good savings plan is a road map to a better financial life. If you create one and follow it, you’ll know you’re looking out for your future self. A savings plan doesn’t have to be difficult, but it does require commitment."
Keep a Goal In Mind
After you’ve put away a chunk of change, you may be tempted to dip into it from time to time for an unplanned splurge. But if the splurge keeps you from your goal, it’s better to resist that temptation.
One way to avoid a lapse is to keep the goal top of mind. Are you saving for a vacation? Put a picture of the locale near your computer or in your wallet to help you stay on track. Building an emergency fund? Put weekly messages in your calendar to remind you that the fund is there for unexpected major expenses.
You could also share your goals with close friends and family, so they can celebrate with you. You don’t have to share specifics. Saying something as simple as, “I made a plan to put away money this month, and I did it!” can help you stay accountable and give a boost.
The people who are the most successful at something have a strong ‘why’ behind what they are doing. So, why do you want to save money? Is it because you want to live comfortably in retirement? Or maybe you want to travel and see the world. Perhaps you want to prepare in case something unexpected happens in your life. Maybe you want to save for your children’s college education. Regardless of the end goal, what is your why? Write this down, then put it in a visible place to remind yourself daily!
Know Where You Stand
It might be scary at first, but looking at where you are is key to where you’re going. Take a look at all of your bank statements, credit card statements, debts and savings you have — and then take a step back to see the big picture. Pay special attention to anything that stands out to you and take note of what things you might be spending money on that don’t align with your values. Is there anything that needs changing? Where do you want your money to go?
If there is anything that you don’t want to spend money on, cut it! And if you want to stick to that decision, figure out how much you were previously spending on that unnecessary expense, and then set up your paycheck’s direct deposit feature to send that amount directly to a savings account (just make sure you are still leaving enough money to cover necessary monthly bills etc.). And that way, the money goes into savings before you have a chance to spend it.
In addition, if you don’t yet have a budget, now would be a good time to create one. The best way to do this is to create categories based on previous months’ expenses, then tweak a bit if you had any expenses in your statements that didn’t align with your values.
Sometimes a good way to devise a plan is to work backwards from your end goal.
Let’s say you want to build up a $1,000 emergency fund — money you can tap into in case an unexpected expense comes up (like a car repair or medical bill).
If you make $2,500 a month in take-home pay (about $50,000 annual salary) and save 10% each month, you’d be able to put away $250 each month. So in order to reach that $1,000 emergency fund goal, it would take you about four months.
But — and this is a key step — you want to make sure your goals are realistic — otherwise it will be easy for you to get discouraged and give up. This is why taking a look at your past spending habits is a good first step. From there, you can create a plan but also be realistic about what will really work for your budget. Anything you can give up in terms of unnecessary expenses is found money!
Eliminate Impulsive Purchases
Here's how it works: Instead of making an unplanned impulse purchase, you instead shelf that potential purchase for 30 days and deposit the money into your savings account instead. If you still want to buy that item after the 30 day period is up, go for it. Otherwise, the money stays in your savings account
Turning Debt Into Leverage
Lastly here at Mulligan Financial we will teach you basic finance fundamentals like how turn debt in leverage and how to use your new savings to accelerate any debt payments you may have. Then use that same leverage to build a savings account stronger than ever all while keeping your exact same income. We like to call it moving money sideways.