Budgeting a Savings Plan

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Budgeting a Savings Plan

Saving money should be a priority. A savings account will help you in the event of a financial emergency, loss of employment, or allow you to take that much needed vacation.

The good news is that you can start building your savings, at least a little, even if you only have few dollars to spare.

Step One

First, it’s important to select the right savings account. You'll want an account that pays interest, growing your money steadily over time. Look for an account that does not require a minimum balance. If you do not have a lot to put aside early, you'll want an account that will not charge you a fee for not having enough in your savings account.

Step Two

The next step is to draft a budget. Knowing exactly how much money you have coming in, and how much is going out each month, will help you know how much money is available to start saving.

At the beginning of every month, estimate the amount of money that will flow into your household. Then subtract your monthly expenses from this figure. Be realistic with your budget, including enough for groceries and entertainment. If you create a budget that's too limiting, it may be difficult to stick to.

Since you will want to be spending less than you are taking in, you may also need to cut back on things that aren't a priority over saving money. Determining necessary expenses from unnecessary or unneeded expenses, will help to ensure you are successful at having additional money to save each month.

Even if you are only saving a few dollars each month, getting in the habit of creating and following a budget is an important start.

Step Three

If your employer offers direct deposit, ask to have some of your paycheck automatically deposited not only in your checking account, but also in your savings account. This way, your savings account will grow without you having to think much about it. If that money doesn't start out in your checking account, the less likely you are to spend it since it is not readily available.

Once you are in the habit of budgeting money for a savings account each month, you'll be well on your way to building a financial cushion for your future.

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