I never knew how much money I could save until I actually started “saving”. I have always been tight and watch my finances, but I didn’t establish a set amount to put back or to budget for that matter. Over the past year or so I have been using Mint.com to help me control my saving and spending habits. Now, I am not a financial planner, I have merely a business minor from the University of Kentucky when it comes to this side of me and anything you read here is my personal opinion and not meant to sway you in one way or another. Simply put, it is food for thought from my personal experience.
As an example of establishing a goal, I decided I would save “X” each month to accumulate “Y” by the end of the year. Mint.com allows you to establish your current budgets and create goals so you can achieve the satisfaction of “Y” whenever you decide you will need it. For this example, I will say that in one year’s time, I want to establish “Y” as $3,000. That means that I will have to set aside “X” ($250) per month to achieve this goal. This may seem like a lot to some and your goals and saving may vary depending on what your “Y” figure is like, but stay with me for this example.
When you begin to put your budgets down on paper, before even committing to your goal, track at least three months of your spending habits. You may find you are spending $50 on fast food each month. Let’s say you cut fast food completely out of your monthly spending and begin taking your lunch to work or school. It may seem nostalgic to consider this, but when comparing this to “X”, by cutting out one simple piece of your monthly waste, you pick up approximately 20% without really doing anything extra. Also, would you rather keep your fast food and the pounds that come along with it, or look slimming in your bathing suit when walking the beaches of Cabo San Lucas. In this example, you can set aside $3,000 and book two all inclusive tickets to Cabo and have a little over $500 to spend while you are there.
Look in other areas where you may be spending too much on unnecessary items and allocate that to your savings. Once you have this set, establish your goal. Additional toppings on the food for thought..