Inside: Ready to create a savings plan? Even if you haven’t been successful at saving in the past, these tips will make you feel like a rock star saver!
My uncle got me my first job at a landscaping company he’d worked with for years. I was so excited about getting my first paycheck. Dad reminded me about the lesson I’d been hearing for years. “Don’t forget to save at least 10% of that check.” I nodded excitedly.
My very own money! What would I do with it?
Well, I did save up 10% of that check in my savings account. Then, whenever I ran out of spending money I would just grab more from savings.
That’s what it was there for, right?
It’s a good thing I’ve never been much of a spender. But the bigger problem was that I didn’t have a good understanding of how to use a savings account. (Or what an “emergency” was, apparently. You mean running out of Diet Coke doesn’t qualify as an emergency?)
If you struggle with keeping a savings plan we’re in good (though unfortunate) company. According to a Bankrate survey, 25% of Americans save only 1-5% of their income. Another 19% save none.
Why is that? Excuses include:
- too many expenses
- debt (Not a bad one if you are focused on repaying that first.)
- “just haven’t gotten around to it.”
I get that Americans have a reputation for being lazy. But I also think that we haven’t gotten around to it because it’s either too confusing or just no fun to save for a rainy day.
So let’s bust up both of those excuses.
How to Start a Savings Plan
Step One: Decide On Your Goal
Why do you need a savings plan, anyway? Well, if you don’t have a plan for your money, you can bet it will disappear.
Here are some savings plans to consider. Don’t overwhelm yourself by starting too many at once.
Long Term Savings Account
Everyone should have some money saved up for a rainy day, no matter who you are. I mean, a few decades ago everyone was wearing Hammer pants. Now MC has to pray just to make it today. I bet he wishes he’d had a personal savings plan.
I’m not getting paid for posting that commercial. I just think it hammers home my point. Get it??
Long term savings is money you put away and don’t touch at all. Even if you can’t find a single Diet Coke in your whole fridge, don’t use this money to buy more. Drink water for a while.
You might also call this an emergency fund.
When an actual emergency rears its ugly head, then you have permission to use this money. Unemployment, health problems, and car wrecks are some of the reasons to pull from this fund.
If the thought of being without money in an emergency scares you the most, start with long term savings.
Short Term Savings Account
Do you have your eye on something more fun? A trip? A fantastic invention that will make your life so much easier? That’s more of a short term savings plan.
Where long term savings might bring up visions of a bank vault, this one is more of a piggy bank style of savings.
If it’s overwhelming to save a large amount of money for emergencies, start with a fun goal instead. You might find that saving is easier and even more fun than you expected!
Related Read: 10 Fun Money Saving Plans to Try
Ongoing Savings Plans
Then there are the types of savings that are for a specific thing that is either far in the future (like college for a baby) or you’d like to celebrate year after year (as in vacation or Christmas savings).
Here are some ideas to get you started on the savings that fit your life:
- How to Start a College Fund Tips from Nerdwallet
- Vacation Savings Account Get a free printable that makes saving for your trip even more fun!
- Christmas Savings Account
Step Two: Where To Keep Your Savings
Now that you know what type of savings plan you want to hit, let’s figure out where to keep the money. Not every type of savings needs to locked away in a bank. You wouldn’t want everything locked up in the bank if you suddenly need cash.
On the other hand, you wouldn’t want to lose your life savings in a house fire, either.
The word we always use when we talk about money applies here: diversify.
In a Bank
You have options for opening a free savings account. Don’t settle for banks that want to charge you a fee to hold your money.
You can open an online account, which is a secure way to earn a better interest rate (assuming you use the right bank). I’ve used online savings accounts for a decade with no problems.
I’m a huge fan of Capital One 360, and you can read my review on Rockstar Finance.
I haven’t tried the Discover savings account, but I’m intrigued by them (and plan to open an account soon). They offer one of the best interest rates you can get on a traditional savings account.
Ally is another online bank that we use to specifically pay off our debt. We directly deposit money here from every paycheck, so it never feels like part of the budget. Ally is great for ease of use and security.
All of these banks offer you the same FDIC insurance as your typical bank.
Brick & Mortar Banks
You will struggle to find banks in your area that can offer you the kind of interest rates an online bank can offer. If you prefer to walk into your bank, look into local credit unions. They usually give more perks to their customers than national chains.
You’ve probably heard of the envelope system. It’s pretty simple. Put money for vacation into the vacation envelope, money for Christmas in its own envelope, etc.
I like to save the envelopes that come in junk mail or with my bills (since I use online bill pay). For a sturdier option (that holds up to life), you can make your own.
In a Jar
Why worry about being fancy when you can just clean out an old spaghetti jar (or grab a mason jar) and see your money at a glance? As a nice bonus, looking at your money might be motivation to try to fill the jar faster.
Related: 6 Benefits of Saving Money In a Bank
Step Three: How to Save the Money
Now we get to the fun part! I know, I know. Saving money seems like a chore. But it doesn’t have to be. There are plenty of ways to have fun while you save.
Make It a Game
If you have kids, I bet you’ve turned clean up time into a game at least once. “Bet you can’t clean up faster than me!” or “Jimmy, you clean up all the blue things. Jane, you get the red ones.”
Why do we do that? Because it means less fighting and the job gets done faster. Well, why not apply that concept to saving money?
Money saving charts are fun because you can just follow the savings plan that someone else created. The problem with most of them is that they act like one size fits all. You either save a small amount at first and gradually increase it, or you save a large amount and your plan gets easier.
I made a chart that works for just about anyone. It’s a fun bingo style money saving chart. You choose the box that matches the kind of week you’re having. Did you get a nice bonus? Choose a big box. Bad week? Take an easy box.
Make It Automatic
A few years ago, The Automatic Millionaire was all the rage. It’s still a popular book, and for good reason. Think about all the times you paid for a gym membership for months (or years, yikes!) after you stopped using it. Why’d you do that?
Probably because you were on an automatic payment plan. We set it and forget it. Then months go by before we remember that money coming out of the account.
So turn it around in a positive way. Set up automatic deductions that flow into a savings account. Then forget about it (until you need it!).
Maybe what you really need is a good old fashioned money challenge. There are tons of options to challenge yourself. If you’ve got a competitive streak, you can try to outdo other competitors.
Try one of these:
- The Money Challenge: Ways to make and save enough cash to start an emergency fund or sinking fund.
- Weekly Money Challenge: A new challenge every week.
Are You “Type A”? Make a Plan
If you want to know exactly how you’ll get from point A to point B, a plan is perfect for you. Make a large goal for yourself. Then break it down into chunks.
- Money Making Plans: Create a way to bring in some extra cash that is perfect for you.
- Budget Savings Plan: Keep more of your hard earned money
You might also enjoy using a spreadsheet. How about one that customizes to your unique life situations? A spreadsheet that can adjust with each week, so that if you save more than usual (or less!) it adjusts to keep you on track to still meet your savings goal in 52 weeks?
Don’t worry, I won’t ask you to create one. I’ve got you covered! Grab a free copy of my 52 Week Savings Plan Spreadsheet here.
Now you can create that savings plan with confidence.
The next time you need a Diet Coke, you’ll be ready to meet that need without draining your savings to quench your thirst.
Do you have a favorite savings plan? What works for you?