Saving money is the most important aspect to taking charge of your own finances. Many people find that starting a savings a plan is difficult, however. Fortunately, saving money can be made easier with a few budgeting skills.
In order to start saving money, you first have to get a handle on how much is being spent. Start by writing down all of your spending for one month. After looking at your budget, try to cut down your spending to no more than 80% of your total income after taxes. Eventually, work your way up to spending no more than 60% of your income, leaving 40% for savings.
Save Money (Photo credit: 401K)
To start a savings plan, divide your savings evenly into emergency, short, medium, and long term categories. Emergency money should be set aside and used for unexpected expenses such as hospital bills or car repairs. Short term savings can be used for things occurring within a year, such as a family vacation. Medium term savings are used for things like the down payment on a house or car. Finally, long term savings are used for retirement. After getting used to this plan, you can reallocate each type of savings to more closely match your personal situation.
Published in: Personal Finance