Six Simple Tips to Develop a Savings Plan

Money is part of our everyday life. Money if used wise it becomes a great servant. However, when we allow poor money management to put a yoke on us and our family, we become the servant of money, and money is a terrible master.

One of the lessons we learned from the recent recession is that we cannot trust those in power to protect our investments and savings from the shaky hands of our politicians and the federal reserve. After being indoctrinated with the consumerism philosophy as the cure for all financial ailments learning to save money becomes a challenge for most families. It is important to know how to manage money efficiently to ensure healthy savings. It is the creation of a savings program that can help us sustain the stormy weathers that are ahead of us.

Before you start looking into an investment program, start by developing a savings program. Most of us have heard of saving money "for a rainy day", but many of us never quite get around to developing a personal savings plan. In our economic model where we focus on consumerism it can be difficult to make a savings plan a priority, but the longer we wait, the less opportunity we have to accumulate a healthy financial amount.


Here are six steps you need to develop a workable savings plan:

1. Determine a savings fund adequate to meet emergencies and achieve special goals. Develop your budget from the amount of savings you need to create a cushion your family needs for the rainy days and not from expenses you currently have. 
2. Add up your total income, including any funds you receive in addition to your earnings.
3. Figure out your total fixed expenses such as rent or mortgage, insurance premiums or car payments.
4. Estimate how much you need for day to day living expenses.  
5. Keep your savings funds separate from your operating funds.  This keeps the savings funds separate from the operating funds and you can see your savings account growing every month which provides motivation.
6. Make the savings systematic, for example you can establish a fixed amount every month  of $100 or you can establish a % of your gross salary.

Remember that you will grow richer each month as you pay yourself first. Good money management is more than financial formulas. It is controlled by the current events in our lives, so it needs to be modified as situations in our lives change. Do not be discouraged if initially your savings plan does not meet your goals. You may need to review your plan and identify the areas that need to be corrected, revise your plan and go at it again. This system works regardless of your job position and/or income level.