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Maintaining your savings accounts
Looking ahead to the future is an important, especially when it comes to your finances. The best way to prepare for the future and give yourself financial margin is to establish healthy savings accounts.
That helps ensure you have cash to cover expenses, stay out of debt, reach your goals, and live without stress. Saving doesn’t come naturally to everyone, but that doesn’t mean you can’t do it.
Take a look at your finances
Sit down and take some time to uncover what your exact financial situation is. Look at your monthly income and spending and what margin you need to stay within to cover your primary spending. You can then allocate an amount each month to put into your savings. Cut out the unnecessary things that are preventing you from saving. You need to form a lifestyle that equips you with more ways to save.
It is important to make a distinction between money that you want to save for short-term needs and money that you want to invest for the longer-term. Your short-term savings should be accessible at any time in case of an emergency.
Make a plan
The saying “he who fails to plan is planning to fail” rings true for your finances! Make short- and long-term savings goals and come up with a plan (starting with a budget) on how you’re going to reach them.
Distinguish between emergency savings and big purchase savings. Maintain at least $1,000 in an emergency fund at all times as you work your way up to saving 9-12 months’ of living expenses. If you want to buy a car, go on holiday, or pay for major dental work for one of your children, save for those specific goals. Assign a dollar amount and a time frame to your goal and get to work!
Expect the unexpected
While becoming future-oriented is very important when saving, our plans rarely go exactly how we imagined. Proverbs 16:9 tells us that, The heart of man plans his way, but the Lord establishes his steps. Whether it’s God’s plan or the broken hot water cylinder that surprises us, be ready to be flexible. If things do not go exactly how you had imagined when it comes to your finances (or any other aspect of your life), just remember that His divine plan is a part of your journey.
Create savings goals
Having goals for your savings can help you to be more intentional with your money and help you to see a present purpose in it rather than only seeing its future potential.
How to get started
It is important to save $1,000 and to keep that money on hand in an Emergency Savings Account. This is an account that you do not spend unless absolutely necessary. Once this is achieved, try to keep saving until you have 3 to 6 months of your living expenses in this account. The Money Map can help walk you through each of these savings goals, as well as other financial goals.
Working on your savings account now will bring you closer to your financial goals and reduces financial stress in the future. Take a hold of your savings and maintain a consistent plan that works for you. Though it might seem difficult at first, taking this initiative will help you navigate through your finances and better equip you for whatever the future may hold.
Looking after your savings accounts
These are some ideas people use for maintaining their savings accounts:
- Many people find it easier to set up automatic payments to transfer money from their spending account as soon as their pay comes in. That removes the temptation to spend it.
- Some people choose to have a savings account in another bank. If they have to go to the bank to withdraw money it makes it harder to withdraw funds when they are tempted to spend it. Some choose to have no card or online banking access to their savings account.
- If you have unexpected money come in, or your spending is below what you budgeted, transfer some of your surplus into your savings accounts.
- Some people use the annual donations tax credit as a tool for saving. It is easy to estimate how big your refund will be each year.
A point to remember
Saving some of your money doesn’t mean you don’t get to spend it. If you manage your savings well you will avoid short-term debt for unexpected expenses. Over the longer-term you will have more money to spend on the things that are important to you, or you can be more generous to others. If you don’t have savings, you will struggle to avoid going into debt when unexpected bills occur. In addition to the financial benefits of savings, life is also less stressful when the unexpected happens and you have savings that you can draw on.
Other articles that might be useful:
Why having an emergency savings account is essential
Setting up an emergency savings account
