Often we avoid saving money because we think we’re young and have plenty of time. We feel like we don’t make enough or we’d simply rather spend, spend, spend. The good news is that no matter what situation you’re in, there’s a plan available to help you start saving.
Whether you’re living off an allowance or minimum wage, there are several ways to start. Let’s look at three examples which range from easy or challenging, which assume you work 20 hours a week at minimum wage ($7.25 per hour). Your monthly income would be $406 a month (after taxes). With that in mind, let’s look at how your cash might stack up if you choose to use one of the savings methods we’ll discuss here.
Easy: Budget, Split and Save
Develop a weekly spending budget. This should include money for essentials like gas, food, entertainment and bills (like if you have to pay for part of the cellphone bill). The next time you’re paid, deposit your spending money – based on your budget – into your Checking account. Whatever funds are left – no matter how large or small – should be deposited into your Savings account. The hardest part of this plan is pretending the money in your Savings account doesn’t exist. With a little patience, over time you’ll begin to build a significant savings. Although this method may not be the fastest way to grow your balance, it does allow the most freedom.
Moderate: 52 Week Challenge
Begin by setting aside $1 on week one. On week two set aside $2. On week three set aside $3…you get the picture. Simply add one dollar to the previous weeks deposit for 52 straight weeks.
When you think about the last four weeks of the challenge, it may seem difficult to set aside $49, $50, $51 and $52 each week. However, when you see the figure of $1,378 saved at the end of the year, it may be worth the struggle.
Difficult: Paycheck Percentage
Using this method, you’ll set 10% of your paycheck which equals $40.60 per month or you could be more aggressive with savings and save 20% which is $81.20 per month. You could start with a smaller percentage and work higher as your pay increases if that makes you more comfortable. The end goal here is as you get a pay increase, the money you put into savings increases too over time.
As you can see, saving can be easy or challenging depending what method you choose to follow. The bottom line is that you frequently set aside whatever you can into a Savings account with good dividends.
Just pick a plan that works well for you and be sure to stick to it.