[S120]Saving For A Rainy Day

Saving money is a problem for a lot of people, and in the U.S. today, personal savings are at record lows. If you want a comfortable future for your family, it is imperative that you learn to save. If you plan to save, you must first plan how you spend. Developing a monthly budget is key for ensuring you have money left for savings.

Before You Start

Discuss your plan to save with the rest of your family and make sure they agree and understand the importance. If they recognize the purpose behind any sacrifices they must make, they are more likely to stick with the plan. Calculate your savings for prior year. How much did you set aside, if any? Make debt a priority. Use your tax refund to pay off expenses in order to pave the way for greater savings.

Pay Yourself First

When creating your budget, plan to pay yourself first. In other words, pay your bills and then pay your savings account before you buy that new TV or take that weekend trip. Saving money now will ease financial strain when something big, like college or a new home, comes up in the future.

Get Started

It takes some effort to construct a family budge. There are many computer programs and other electronic aids to help you, and of course, you can always opt for the old faithful pen and paper. Find a good example of a budget worksheet online to give you a guideline to go by, but most of all, choose a plan that will be easy and efficient for use and compliments your needs.

You will first need to consider your monthly income. You should calculate every penny that goes into your pocket. This information will help prevent you from spending more than you make.

After you know your exact income, you should track your spending. Take at least a month to determine how your money disappears. Make a record of everything from bills to bowling in order to plan the most efficient budget.

Organize your spending into categories to include both the things you need and must pay for, like your food and your mortgage, and also the things you enjoy but could live without if you had to, like a monthly manicure or eating out twice a week.

Spend Less and Save more

After you've looked at your detailed spending list, you can determine whether your debt is greater than your means. If you don't make enough to cover you car and house payments, you may need some aggressive action. For most people however, the overspending comes with the 'incidentals' and the luxuries we've all grown accustomed to.

Your incidental spending will be the easiest place to cut back and make room for saving. You can start by canceling magazine subscriptions and going out to eat less often. Rent movies instead of going to movies to avoid the snack bar pitfall. You can always pop popcorn at home.

Dig Deep

You may be able to reduce spending in other areas as well. You might want to consider more economical shopping and clipping coupons. Try carpooling more often to save on astronomical gas prices.

Credit card debt may be a problem for you as well. You should have a pay off goal and may want to consider shopping around for low balance transfer rates or cards with no annual fee. Card Web has a great list of low rate cards and you can contact them by calling 1-301-631-9100 or visit their site at cardweb.com. There are other banks that offer attractive credit card offers such as balance transfer and others which might as well allow you to save more. Low introductory rates that skyrocket after six months are a common pitfall. If you switch to a low rate card, make sure it's for the duration of the balance.

Consider a home equity loan for a tax deduction, or look into a consolidation loan. Be certain you can make the monthly payments before going this route. Banks have the power to foreclose on a home equity loan in 90 days if you have missed your payments.

If you're struggling with debt and it's thwarting your effort so to save, the National Federation for Credit Counseling can help you set a budget and organize payments with creditors for a small fee. You can contact them through 1-800-388-2227 or you can visit their site at nfcc.org. Once you start to pay off debt, you can use the extra money to build savings.

More and More

As you get on a roll with your budget, you will start finding room for more savings and anticipated needs. You may even be able to set money aside for these anticipated needs. You will still need to pay yourself first, but you may also begin to set money aside for that new car or the boat you've always wanted.

If you set a savings goals for the long and short-term, you will likely save more. Studies indicate that people who have goals, tend to fair better in the long run.

You will have to manipulate your budget as your circumstances change. Don't allow your plan to become stagnant and end up back where you started. Stay on top of the budget to stay on top of the savings.

Summary

A budget can be organized on the computer or plain old pencil and paper. Analyze your spending for one month. Do you spend more than you make? Try and always keep track of daily spending. To free up cash for savings, start by spending less on incidentals, then work your way up. Pay down debt. Set aside money from each paycheck for saving. Ask your bank about payroll saving and look into your company's retirement savings plan. Stay on top of your budget and update it as often as necessary.