Knowing how to manage your own resources is almost an art. You need a strategy, master some fintech or digital tool that allows you to make calculations and see graphically how your expenses are going and, above all, a lot of vision for the future. In this post, we will talk about how to design your personal savings plan so that you never say that again: I can’t make ends meet!
What is a savings plan?
Over time, we have learned that proper management of our economy is essential to achieve financial stability and achieve our goals and dreams, which is why, from a young age, we need to have a clear concept of what money is and how to distribute it in depending on our needs.
If we want to start saving, but seriously this time, the first thing we have to do is create a realistic savings plan that is in line with our level of income and personal conditions. First of all, it is necessary to understand that a savings plan is a financial strategy that helps people to rescue a part of their income in a constant and systematic way in order to invest it in a project in the medium-long term. In other words, an effective savings plan considers all the variables to calculate the exact amount that can and should be saved every month.
One of the main objectives of the savings plan is to create financial stability and draw the lines of allowable expenses to avoid unnecessary and impulsive purchases that make us lose control over money.
What savings plans are there?
To design the savings plan that best suits the needs of each family or person, there are several types of savings plans, which we will see below:
- Savings accounts: they are the most basic and accessible. These accounts are offered at banks and other financial institutions and generally have modest interest rates, but offer liquidity and security for the money saved. Although lately, some digital native banks are appearing that do offer this type of account completely free of charge.
- Certificates of Deposit (CDs): These are low-risk investments in which a sum of money is deposited for a fixed period of time at a predetermined interest rate. CDs offer higher returns than savings accounts but imply a lack of access to money during the established term without penalties.
- Mutual funds: These are investment vehicles that pool money from different people to invest in a variety of financial assets, such as stocks, bonds, or real estate. They provide growth opportunities for money but carry risks associated with market movements.
- Retirement Plans: These are plans specifically designed to save for retirement. Examples include individual retirement accounts (IRAs) and 401(k) plans. These offer tax benefits and investment options to ensure a comfortable retirement.
- Emergency Funds: This is not a specific type of account, but an important concept. An emergency fund is savings intended to cover unexpected expenses, such as home repairs, medical expenses or job loss, without having to resort to debt.
- Educational savings plans: these are accounts designed to save and pay for the education of your children or your own. Examples include 529 plans in the United States, which offer tax advantages for savings for higher education.
- Investment Accounts: These are accounts that allow investors to buy and sell financial assets, such as stocks and bonds, with the goal of earning long-term returns.
As you can see, these are the most common types of savings plans, but even so, these can be further customized with other conditions that may be agreed with the bank in question.
How to make a money-saving plan?
You are finally aware that you need a savings plan in your life! But do you know where to start? First of all, the most important thing is that you arm yourself with willpower and don’t put it off any longer, because it will cost you more to get used to it. Once psyched up, follow these steps to develop a savings plan:
Set clear goals: define exact amounts of expenses, income and savings. Think about everything well so that you do not forget any relevant information. Experts recommend starting with small savings goals and gradually increasing them.
Control income and expenses: first consider the monthly fixed expenses, the income, and then the less important habitual expenses to detect the most dispensable.
Design your strategy: this is the time to compare prices in supermarkets, consider other mobile rate options, look at what other utility companies offer, take advantage of offers, etc. Surely, you realize that you can cut a lot, although this work requires a period of research and constant attention to the market.
Use the 50-30-20 rule: it is very easy to explain, but you have to plan not to get out of it. It works like this: 50% for basic expenses that are essential, 30% for specific expenses, 20% for savings.
5 Fintech that will help you carry out your savings plan
How could it be otherwise, new technologies also help us with personal finances and, thanks to Fintech, we have several applications within our reach with which we will better control our expenses. Meet some of them!
- Fintonic: this application allows you to manage your personal finances in a simple way. You can link your bank accounts, credit cards and other financial products to have a complete view of your expenses and income.
- Cleo: is a virtual financial assistant that uses artificial intelligence to help you save money. The application analyzes your spending habits and offers you personalized recommendations to improve your finances.
- Acorns: this is an app that makes it easy to save by investing the change from your purchases. The application rounds up the purchases you make with your linked cards to the nearest dollar and allocates the difference to an investment portfolio. It is a simple way to save and invest small amounts without realizing it.
- YNAB (You Need a Budget): is based on a budget method that helps you allocate every dollar of your income to specific categories. YNAB allows you to set savings goals and track your progress in real-time.
- Mint: Mint is a financial management tool that allows you to create budgets, track spending, and receive alerts about payments and due dates.
If you want, you can also read about:
- Can’t save money? Discover the 50/20/30 rule
- How to calculate the internal rate of return
