Saving for your future may be easier than you thought. You may want to consider the easy 10% method of saving. Open up a separate savings account, which will only be used for obtaining your life goals, and transfer 10% of every paycheck into this account. You can set up a scheduled transfer to this new account or you can transfer to it at any time you’d like online. If cash does not flow readily enough to allow this, or conversely, if you think you can save more than 10% of your income, then you will need to take more time to figure out the exact amount that you will be able to save every month.
The Individualized Saving Method
It might be a good idea to keep an income and expense diary to track your finances. After you have kept this diary for at least one month, draw up a budget that includes all incoming and outgoing money for one month. Be sure to include the following items:
- Net monthly income. Make sure that this is your income after taxes.
- Monthly expenses. These include debt payments, insurance, groceries, transportation, recreation, and the like.
- Miscellaneous. Include a set amount used for extras that are not accounted for in the monthly expenses.
Using this budget, you can determine how much you can set aside per month. If the figure you reach is too low, see where you can decrease your spending in order to increase the amount you are able to set aside. You will be surprised how much you can save by making such small changes. By creating and analyzing your budget, you can see where you are spending your money and you can redirect it in ways that are beneficial to you and your future. And don’t forget: once you create a budget that works for you and your future, stick to it.