Month 9: Building Up Your Savings
Let’s dive into this month’s topic: SAVINGS!
Oh no, did you just become overwhelmed? Maybe a little stressed on how you’re going to tackle savings along with your monthly expenses and upcoming purchase?
Have no fear! With a little discipline and systems in place, you’ll be growing your savings and will actually look forward to growing your reserves.
Short-term, everyone needs a savings cushion to help with unexpected expenses. Your first goal is to save $500. Pay yourself first by setting aside $20 from each paycheck into a separate account and in less than a year you’ll reach this target!
With this in place, you’ll have the cushion you need to avoid having to charge an unexpected repair or borrow from a family member. And, by paying yourself first, you can put back
Once you hit that target, keep setting aside money each paycheck until you hit $1,000. At this level, you can handle most of the bumps in the road life is likely to throw at you.
Your long-term goal should be maintaining a balance of 3 months in savings will help protect against those unexpected emergencies. For example, if your monthly expenses including your mortgage payment equals $2000, then you should aim to have $6,000 saved up for this long-term goal.
Besides growing your financial savings, you can also grow your savings beyond the traditional ways.
Maintain and grow your home’s market value – as your home value goes up, you can use that wealth to your advantage.
Contributing to your company’s 401K program or setting aside money in an IRA.
Having the right level of savings gives you the confidence and resources to handle the unexpected problems life can throw at you!