A weekend drill to jump start your savings

Have you ever attempted to start saving money? Where did you begin? It's very common for people who are searching for ways to save to begin in the area of everyday consumption. You might start cutting back on everyday purchases such as coffee house drinks, lunches, beverages, leading up to maybe less shopping trips to the local mall. Since all things must begin somewhere these changes are a start but unless you have a solid plan to seriously start saving money then your savings goal is likely to be sub-par. There are three things you could do in a weekend to jump start your savings. Below is our quick guide to saving, one for each day of the weekend. Each step should only take 15 minutes each day.

Day 1 A plan is only as good as its goals.

OK babe, this is the easiest part of the program. Take out a sheet of paper. In one paragraph write down what your goals are for your savings. Are you saving to help stretch your monthly budget to pay bills or are you starting to save money for your future. Is this money to start an emergency fund or do you want this fund to be your go to hell fund. Is this a car, vacation, or school savings fund. Whatever the reason for your savings determine why you want to save and where you will keep the savings.

Day 2 You need to understand how you spend money.

Pull together all of your bills, bank statements, credit card statements, cash receipts, and any other statements for the last two months. Go over every item you've spent money on during these two months. Now take out another piece of paper and write these items down (don't use a computer as the writing will help to reinforce the information in your mind) for each month list the largest expenditure at the top of the list and then each spending item from largest to smallest. You should be able to account for every dollar you spent in each of the previous two months. This will allow you to see where you are spending your money. Then use this information to compare how you are currently spending to how you might save your money. Look over the list to determine how you might save money on each and every item. Not just coffee or gum purchases, yes these too, but every item. The largest might be your mortgage or rent payments. Can you save here. If you rent can you find a more affordable apartment or could you consider renting a room. If you own a home does it make sense to look at the interest rates you are paying on your mortgage. Have things in the economy changed, are interest rates much lower than when you originally took out the mortgage? If so then consider refinancing your home to lower the payment. You will then take the difference between what you were paying and the new payments and put that in a savings account. In addition to the increase in savings you could save a bundle on the interest you will pay over the life of the mortgage. There are other considerations when refinancing a mortgage such as the payment of points and closing costs, in addition to perhaps extending the loan term, so be sure to research the entire refinance before you move forward. Is your car payment, if you have one, a larger expense. Can you perhaps refinance this loan or better yet call the lender and ask if they will reduce your interest to help you better afford the payments. Same thing goes for each of your credit cards. Many of your creditors will consider decreasing the interest they charge if they feel there are compelling reasons to believe the borrower will not be able to continue to make their regular payments. You won't know if you can reduce your interest expenses until you ask.

Day 3 Determine the amount you are going to start saving

After you have identified the areas you can save in then you need to determine how much you can start saving. Commit to saving this money from each paycheck or at the end of each month. The best strategy is to arrange the amount you are planning to save automatically transferred into a savings account directly from your employer through their payroll services if available. An alternative is to set up an automatic transfer from your personal checking account into your savings account. This way saving becomes automatic and you are not tempted to put it off. If you can't make saving automatic for some reason then I recommend you get your bank to send you a dozen extra deposit slips and envelopes and place one deposit slip in each of twelve envelopes. Then each month when you are paying bills you write a check and send the savings off just like you would any other bill you pay.
One of the things you will want to look for in starting or increasing your savings is to see if you can take some of the dollars you are already spending and reroute them into a savings account. This is where you want to start looking for savings opportunities. After you've determined whether you can or cannot squeeze savings from these areas of your spending then you can move onto the next phase of looking at paring back spending. Look for way to limit or eliminating spending in other areas of your budget.
We recommendation you have a separate account for your savings goal. If you have more than one goal then consider opening more than one account if you are not disciplined enough the commingle your different saving accounts. There are many no cost/low cost saving account options. Be leery of free account offers as many of these accounts are not insured by the FDIC or any other insurance or financial institutions.

By starting with a goal and taking a good hard look at where you currently spend money you can jump start a savings plan to meet almost any goal.

The information contained in this site is the sole opinion of the Baron Von Savings. The Baron is not a professional money manager, tax expert, accountant, attorney, or stock broker. You should consult with an appropriate professional before making decisions concerning your finances.