If there is anything we have learned from the pandemic, it is that life is unpredictable and that it’s always better to be over prepared rather than under. A simple, yet often overlooked way to ensure a stable future is budgeting. And one of the most disciplined ways to begin budgeting is to start saving money for your future. By budgeting every month, you can also set aside a portion of your income to put into savings. There are countless benefits to putting away money from your paycheck or business each month, but not everyone does it. Here are some tips and tricks we have gathered along the way to help you get into budgeting and be over prepared for whatever comes your way.
Give yourself time
Whether you’re looking to budget for a big purchase, pay off debt or simply save, you’re going to need to give yourself time. Budgeting doesn’t just happen overnight. We recommend you give yourself 12–18 months’ time to truly achieve your budgeting goals. Giving yourself time to get things right will prevent you from setting unrealistic goals and feeling overwhelmed when you don’t have as much money saved up, or as much debt paid down, as you would like. It will also reduce stress when paying future expenses and help you avoid overspending. During a pandemic we have plenty of time, so make sure to take advantage of this opportunity to save.
Maximize your savings
Now is the perfect time to maximize your 401k or retirement plan. With all the uncertainty that comes with a global pandemic, it is more important than ever to save. You can never have too much saved up, so the sooner you start, the better. According to Capital One, a typical rule of thumb is that 20 percent of your income should be put into savings. There are exceptions to this, however, keep in mind that any amount you put into savings is better than none. Additionally, the stock market is at an all-time high and the economy is growing, which makes now an ideal climate to maximize savings. Take advantage of employer matching and start investing in your retirement fund. It is easy to underestimate how much money is needed to retire comfortably on, so take note of your preferred lifestyle and how much you currently have saved up and make changes to your budget accordingly.
Have a back-up plan
According to Capital One, 69 percent of Americans have less than $1,000 in their savings and 34 percent have nothing saved at all. When a pandemic strikes, these individuals have very little to fall back on and find themselves in extreme financial distress. Having a good “rainy day fund” is a game-changer — especially during a period of economic uncertainty. The fund should total as much as 8 to 12 months of your living expenses. This ensures that even when an unexpected pandemic turns your world upside down, you will not have to panic about paying the bills for quite some time.
Make savings habitual
The key to saving is consistency. Putting money into your savings should either be done automatically, like through an app or auto withdrawal from one account to another, or deposited manually like clockwork. This will regulate the amount being put into savings, which will continue building over time. Making savings a habit instead of a task at the bottom of your list will pay off in the long run. Make sure to use your resources. Helpful budgeting apps to keep you on track are Mint, Every Dollar and Truebill. Or, if you prefer a more personal approach to savings and preparing for your future, schedule a consultation with your financial advisor. At FinDec, we provide our customers with budgeting software and give thoughtful advice depending on a client’s unique needs and goals.
Lastly, and debatably the most important tip is a fun one: treat yourself. That doesn’t mean go blow all of your savings on that boat you have always wanted, but you should reward yourself from time to time. Set goals for yourself. For example, every $1,000 you put into savings means a small shopping trip or a golf outing. Whatever it may be, it is important to treat yourself from time to time. Putting a portion of your income into savings is a smart, responsible choice, and for that, you deserve a vacation (after the pandemic).
At FinDec, our door is always open to new clients seeking financial advice. We are eager to share the knowledge we have acquired over our many years of service. Consultations are always welcome. Visit FinDec.com for more information.