In broad terms, everyone knows that they should be saving. The questions are (1) what am I saving for and (2) how much should I be saving?
If you are a millennial, you might be thinking about getting married in the coming years or buying a home, or maybe just plainly, am I even setting myself up for success right now? I want a glass of wine now, but will I have enough for a bottle of wine later? Here are a few things to get you started
Create savings goals
Whether it be for international traveling or a girl’s weekend in Tahoe, attach a savings goal. This ill not only help you achieve the goal, but ensure that you are not just mindlessly “saving”. It can be a “Fun Fund” where maybe you have been eyeing that new Kate Spade purse that you want but don’t NEED.
Now, if you are not sure of what specific goals you want to save for, make sure you have the basics down:
- Emergency savings: 3-6 months of your income in case of emergencies
- Rainy Day Fund: for when that Oh S*it day comes and karma is out to get you
- Retirement: take advantage if your company offers a match for your 401k ahem FREE MONEY
Some of my savings goals are: Travel, Giving, Gifting, Emergency, Rainy Day, and my dog, Dawson. Sounds like a lot of goals, but I say give your money meaning and put it to work!
Set an amount for your savings
The next step is how much you want your savings goals to be and how much it will take to get you there. For example, in my travel fund, I know I like to do one major travel adventure once a year. It should cost me roughly $1000. I split that up in equal automatic payments of $83.33 a month. Sounds do able, right?
For a Rainy Day fund, my goal is $1500. Sounds steep, I know, but remember after the first year it is funded, I don’t have to contribute to it unless I take something out. The other day I had to replace my car battery because it had died on me in a parking lot. I needed the money quick, so I paid the $200 out of my rainy day fund. (I recommend have money set aside for insurance costs and car/home repairs but more about that later). If I needed to fund my rainy day fund from scratch, all I would need is $1500/12 = $125 a month.
Check in Frequently
Have some Money Dates- sit down with a glass of wine or preferred beverage and see where you are at with your finances. I keep a spreadsheet with the savings goals, names, broken down my month where I can easily track where I am at. Online providers like Mint.com do it for you, if you want a more collective snapshot. You should be checking what percentage is your goal at – are you close to making your mark? Have you been dipping into the savings and need to revisit your budget? Could you save a little more in certain areas?
It is always good to see how you are doing at saving and there are many types of savings.
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