03 Mar Savings Checklist – 10 Must-Follow Items
A Savings Checklist seems to be a simple task that turns out quite complicated, if you don’t have much direction or know where to start. That’s ok, that’s why we’ve created a general money saving checklist for you to follow. This will give you a great starting point, a direction for your financial future, and ultimately allow you to predict how your financial future will be. Simply follow the tips and the rest will fall into place!
10 Must-Follow Items to Add to Your Savings Checklist
Each of these items below aren’t just ideas, but actual strategies that even millionaires and wealthy individuals use today. Furthermore, their foundation is mathematical, and even allows you to predict where you will be in “x” amount of years financially if you stick to them!
1. Start with The End in Mind
Most people will just start saving money because they heard that they’re supposed to. It’s like going on a road trip without any idea where you are going, and no map to guide you. Starting with the end in mind not only allows you to have a map, but also allows you to mathematically calculate what will be needed to get to the end destination (a new house, a two-week vacation, that new car, retirement, etc.).
Furthermore, having a set objective or goal for your money saved gives you more ownership of your money psychologically. When you are actively working for something that you want, there’s an aspect to it that makes it more satisfying when you know what that “something” is.
2. Budget Your Savings
If you haven’t built yourself a budget that you stick to regularly, you’re going to want to do that first if you haven’t already. Within that budget should be your savings goals, and a pre-determined amount being set aside to reach that goal.
What happens if you don’t budget in your savings? You end up at the end of the month claiming you don’t have enough money to save anything, without realizing that you stopped at the gas station for your favorite drink, totaling nearly $100 in added expenses. Giving each dollar a name allows you to predict your financial future, and gives you full control of your money, not the other way around.
3. Pay Yourself First
Paying yourself first means setting aside money to save as one of your number one priorities in your budget. This should be a top priority on your savings checklist, right up there with food, shelter, water and heating / AC expenses. Yes, you have other expenses that need to be paid too, so keep those in mind while determining how much you can pay yourself. The idea is that something is better than nothing, even if it’s just $5.
Paying yourself first not only has future monetary benefits, but it also allows you to build this habit into your subconscious to be a regular and even hard habit to not follow. Imagine a future where you’ve paid yourself first for nearly 10 years straight, sound exciting? That’s because it is…
4. Start as Early as Possible
Perhaps the biggest asset any of us have when it comes to saving money is time. The more time we have to save, the more savings we can accumulate. If you’ve invested that savings, you’ve also got compound interest on your side, which could mean thousands of extra dollars on top of your savings.
What if you had saved just $100 per month starting at age 18? In ten years’ time, that would be $12,000. If that was invested at a conservative 7% return, that $12,000 would have grown to be $17,308.48.
5. Put Your Savings on Autopilot
It’s easy to get excited about saving money when you think of all the benefits it can have. What often happens is individuals set up a plan, stick to it for a few weeks and later forget about the plan completely!
You can eliminate this by putting your savings on autopilot. How? Setting up an automatic transfer on a regular basis will make sure you don’t forget to save money. If life gets busy and you forget about your savings plan, that’s ok because it’s set on autopilot!
6. Establish an Emergency Fund Before Other Savings Goals
It’s a fact that unexpected events can and will occur in the future. It’s just a matter of time. When those events do occur, most people who don’t have an emergency fund end up using debt to pay for the unexpected expenses, putting them even farther behind and in an unhealth position financially.
Your very first goal with your savings checklist should be establishing an emergency fund of at least $1,000. Why $1,000? It’s an attainable amount regardless of your income, and will be enough to cover the majority of unexpected expenses. Some go even farther to establish an emergency fund of 3 – 6 months of their living expenses. Either way, your emergency fund should be your first savings goal, before any further savings plans are made.
7. Invest in The Stock Market
A common mistake people make is not investing their savings in the stock market. Keep in mind that not all savings should be invested. How do you determine whether to invest your savings or not? If you can answer “No” to these three questions, then you might consider investing in the stock market:
- Is your emergency account fully funded?
- Have you paid off your high interest debt such as credit cards?
- Is the money being invested for a savings goal that is at least 12 – 24 months in the future?
8. Reward Yourself
Giving yourself a reward for reaching savings checklist milestones can make saving money even more fun and satisfying. You might consider a monetary reward, a vacation, a small purchase, etc. when you reach savings milestones. Some milestones might be things such as a certain amount saved, saving “x” amount weekly and consistently for a certain amount of time, or nearly any achievement that you feel has taken some hard work.
9. Don’t Procrastinate Retirement Savings
If you don’t want to be working for the rest of your life, you need to save for retirement. To show you the importance of saving for retirement, consider how much money you want to live on in retirement, calculate how much you will need to live on that income, and the final number will make your stomach drop to your feet.
Don’t let that scare you, however, because compound interest has a big role in saving for retirement. When invested in the stock market, and when you start saving as early as possible, the ultimate number becomes much more attainable than you might think.
10. Review & Update Your Savings Checklist Regularly
Initially, this may take some conscious effort on your part. Once it becomes a habit, you won’t be able to buy anything without knowing you’ve reviewed and updated your budget and savings plan. Consider reviewing your budget and savings plan at least each time you get paid. Generally, it only takes 10-15 minutes and will result in thousands of dollars in net worth over the long run.
Imagine What Your Future Will Be Like If…
Can you imagine how abundant your future would be if you followed each of these savings tips for your entire life? It’s definitely possible and is currently being done by todays wealthy millionaires. In the beginning it may seem like little progress is being made, but after years of diligent practice, it starts to look like enormous progress is regularly made.