Saturday, May 12, 2007

Five Steps to Saving More

If you need money to reach your financial goals, and we all do. There are only two ways to do it, spend less or save more.

Five Steps to Saving More
Step 1: Eyes on the Prize
know what you are saving for and how much it costs.
Step 2: Know what's coming in
Whatever amount you are trying to save, it's helpful to know what's coming in, this means using some kind of record keeping system whether financial software or penci & paper.
Step 3: Know what's Going Out
The post on Budgeting will be extremely helpful for steps 2 & 3 as will the spending tracker worksheet.
Step 4: Make Changes
Once you know what's coming in and going out, you need to make changes to ensure you are living within your means. For example, you can curb your spending on eating out and instead bring leftovers in your lunch.
Here are the percentages of your take home (net) pay that Finance Guru Jean Chatzky says you should funnel into various expense categories.
Housing: including the cost of living there, taxes, insurance, utilities, and repairs 35%
Transportation: including gas, insurance, and maintenance 15%
Debt Repayment: not including house & car payments 15%
Living: clothing, food, charitable donations, entertainment, gifts, travel, etc. 25%
Saving: 10%
Step 5: Automate to Force your own Hand
Once you figure out what you have left, save the money you're not spending. The very best way to save - talk to your bank about moving some money out of chequing and into savings automatically each pay period.