A lot of people do not have a good savings plan. They struggle with how to balance their income between bills, savings, and entertainment. Some people are spenders who are great at spending money but bad a saving. They have a lot of fun bow, but struggle with future endeavors. On the other end of the spectrum are the savers. These people save every penny and never seem to have fun; they often referred to as a tight arse. In between are the other two categories, ‘avoiders’ and monks. These people avoid dealing with money as much and people or believe it will just sort itself out.
A great savings plan to use the old fashion jar system. You setup jars, or in today times separate bank accounts, for your budgeting. Each time you receive income you split the money into the jars in the set proportions.
10% – Investment account
10% – Long terms savings for spending
10% – Entertainment account
60% – Necessities
5% – Donations and gifts
5% – Education
Investment Account
This account is a never touch account. It is designed to be a longterm financial freedom savings plan. This could be setup in several ways. It could be put toward property, shares, managed funds or term deposits. But it should be put to growth investments so you can create passive income streams from them.
Long term saving to spend
This account is great; this is where you put 10% towards longterm things like holidays, a new sofa, a stereo system for your car. You normally set a specific goal and only spend it when you reach it. You can split this into to 5% accounts if you like to make reaching your goal easier. One might be a flat screen TV at $2000 the second a holiday at $5000. Either way each month you put 5% into both until you reach your goal.
Entertainment
This one is everyone’s favourite. You have to spend this one every month or at the most every two months. This one is designed to reward you for your hard work of savings. Spoil yourself with a massage or a nice dinner for two. You have to really enjoy it. The great thing is you can spend it without feeling guilty. It feels great.
Necessities
You all know what this is for. Electricity rent, food, fees etc. The boring stuff we wish we didn’t have to pay for. Unfortunately we have to so we have an account for it. A lot of people struggle with the 60% allowance but it is a target to reach and you will be amazed how you will find ways to reach your goal if they are clear and within your savings plan.
Gift and donations
The universal law of attraction applied to this account. In order to receive we need to give. This account is opened for your gifts and charities. You will feel great if your savings plan includes donating to places like
Save the Children
RNZSPCA
Red Cross
Education
This little bit of savings it to spend on your future education. This one seems strange to some people but an ongoing education is important. It might be a course on setting up websites or an investment course. You might want to do a home handy man course. When something like that comes up you have the funds there to do it.
A saving plan is simple when you have a good practical plan. The old fashion jar system has been around for years and has worked for a lot of people. The best part about it is seeing your savings build up and spending your entertainment money at the same time. Give it a go and see if this savings plan works for you.