Budget for Savings

Everywhere you look it says “Pay yourself first” and at this present moment in time that seems to be an impossible task. Sound familiar? You already run out of money long before you run out of month! There is absolutely no way you can put anything aside in the form of savings it’s just not going to happen!
If you are not already managing your money correctly by way of a budget, then that is exactly where you need to start.

Set out your budget:

• Start with the pen and paper method.

• Don’t forget to include your long term expenses.

• Once you have covered everything (don’t forget the visits to the coffee shop), you can see which expenses you can cut back on.

• When you have completed your budget, you should be left with a little (as long as your budget isn’t completely overstretched) from the little you have left over, you can decide to put away some if not all of it for savings.

No matter how insignificant this amount may seem, if it is put away regularly it can certainly amount to something quite considerable over time.


Eg

You have $10 a week that you can quite easily put away and not miss it. Now it doesn’t sound like much however you have been doing it for 5 yrs.
10 x 52 x 5 = $2,600 and that is without any interest that you may accrue.

The next thing you need to do is to include this in your budget, then you need to find a way of separating the money from your everyday account.

Have a talk with your bank; there are several savings options available.

• If your savings are left untouched, you will earn interest and eventually interest on your interest – this is called compound interest which can make a sizable difference to your savings.

• Look into account keeping fees; you don’t want a chunk of your money swallowed up in fees each month.

• If you are most definitely not going to miss this money you may even want to consider a term deposit account which will pay a higher interest rate – keep in mind, you will not be able to access this money until the term has expired.