Hey Babes! Welcome back. I’ve spent the last two weeks going over my personal finance goals for 2019 and my budget for January. So I figured this week I would talk about the next step which, for me, means creating a saving plan so I won’t have to worry about being broke at the end of the year!

We all wish we could save more (or save anything at all) and, honestly, we probably can. Even if you don’t make a ton of money (I don’t!), saving is still possible. So why does it seem so hard?

Most people don’t actually have a PLAN that they can stick to.

Planning is so important if you actually want to reach your saving goal. So below, I’ve written out some easy to follow steps for setting up your own saving plan, along with my real-life numbers so you know that it’s actually possible.

Ok, here we go!

1. Figure out your monthly income

The first step in creating a saving plan is to figure out how much you make each month. I make $20.50/hr and I work 40 hours a week. So in one month, I make about $3,280 a month before taxes. But, unfortunately, taxes do exist. So you have to deduct those to figure out exactly how much you actually have. My taxes are usually around 25% so that leaves me with $2,460 of income each month.

You need to know how much you make before you figure out how much you can save.

2. Calculate your fixed expenses

The next step is to add up all your fixed expenses for the month. Fixed expenses are bills and other expenses that stay the same each month. This usually includes things like rent, insurance payments, car payments, and other bills like subscription services (yes, Spotify and Ipsy count). Every month, I pay $1,639 for rent (including utilities, internet, and cable), $10 for Spotify, and $80 in transportation costs. This puts my fixed expenses at $1,729.

Once I subtract those, I have $731 left for the month.

3. Get real about your spending habits

This is the hard part. You need to take a look at what your spending habits are like, realistically. Don’t say, “Oh I occasionally buy Starbucks” when in reality you buy coffee 15 times a month after getting your nails done and going shopping. I was so guilty of this! Also, think about things like how often you get GrubHub or how much you spend on Ubers. These are all variable expenses (expenses that change month to month). We often forget to think about them and as a result, forget to budget for them.

If you really have no idea how much you spend each month, take a month to write down everything you buy, then add up the total. You’ll be surprised (I almost DIED the first time I did this!).

I never remember to write down what I buy so I prefer to use an app like Mint. You just hook it up to your bank account or credit/debit card and it records and categorizes all of your purchases. This way you can see not only how much you’re spending, but also what you’re spending most of it on. It helped me realize that the $4 I spent on Dunkin Donuts Macchiato’s “here and there” were really adding up!

Don’t gloss over this step. If you’re serious about saving, you have to get real about your spending habits. It kinda hurts, but it’ll pay off, I promise.

Saving is a big deal for me, so I only give myself $160 a month to spend on things like this. I definitely had to cut down on some spending to stay on budget. If you’re not sure how you’ll survive on just $160 a month, check out my January budget breakdown where I go over exactly how I do it and what I spend it on.

***NOTE: I don’t have a car here in Chicago so, unlike me, you might have to factor in gas money too

4. Set aside grocery money

Don’t forget to eat! This might seem like an obvious step but it’s weirdly the one I forget all the time. Even if you go grocery shopping monthly or weekly, this is still a variable expense. Mostly because grocery prices are always changing, but also because you don’t need to buy EVERYTHING each time you go shopping (if you go grocery shopping every weekend, you probably don’t need to buy a whole gallon of milk every time).

Think about your spending habits at the grocery store too. Are you spending money on name brand items when you could get off brand ones for much cheaper? Is your shopping cart filled with expensive, ready-made items that you could probably make yourself for much cheaper?

I know life is crazy and you don’t always have time to cook. Trust me, I get it. I’m just saying to think twice before you buy. You’d be surprised how often you just throw stuff in the cart only to freak out in the check out line and be too embarrassed to put it back.

I usually budget $200 a month for groceries, but my boyfriend and I split the groceries so it usually ends up less than that. Still, better safe than sorry.

5. Don’t Forget About fun money!

I honestly believe that the reason it’s so hard to stick to a budget or a saving plan is that we forget to budget for fun! I don’t know about you, but I’m definitely guilty of getting a little carried away when I’m setting goals for myself, saying I’ll work out twice a day and only eat chicken and veggies, and NEVER BUY ANYTHING AGAIN.

Obviously, that’s dumb. (Unless you can actually do it, in which case, I’m so jealous!) It’s easy to set unrealistic goals, but then we always end up failing.

Budgeting and saving is not a short-term project, it’s a lifestyle, so it has to be sustainable. The best way to do that is to actually set aside money for fun things! It’s a great way to teach yourself how not to overspend since you wrote down the exact amount of money you have. It also lets you actually enjoy your life without stressing about whether or not you can afford it. You already know you can because you budgeted for it!

My absolute favorite way to set aside fun money is by using Cash App. It’s an app (duh) that you can connect to your bank account. It let’s you easily set up automatic transfers that you can turn on and off with just one click. I set it up to transfer $40 a week to my Cash app. (I turned it off for January to help me with my No-Spend Challenge).

You can even have Cash App send you a personalized and super pretty debit card so you can use the money you transferred just like you would use any other debit card. Once your money for the week (or month) runs out, you can’t spend any more until your next transfer!

If you don’t want to download an app, you can always withdraw cash, but I’m a huge fan of automation so that I never have to worry about it.

6. Set aside savings money

Ok, here it is! Once you’ve budgeted everything else, figure out how much you have left over. I typically have $200 left over ($211 to be exact). This is what I put into savings.
At the end of the month, I also like to take a look at how I’ve done with sticking to my budget. A lot of the time, I find that I actually spent less than I budgeted for that month. In those cases, I take the extra money and save that too! (but sometimes I treat myself)

7. Automate it!

I hate to break it to you, but that was the easy part. The hard part is actually sticking to your savings plan to make sure it works. I find that the best way to do this is to set it and forget it.

Automating makes saving literally mindless. I have my savings with Ally bank. I love them because the savings account is entirely online and setting up automatic transfers is super easy. I have my account set up so that my main bank transfers over $200 a month to Ally. My last monthly bill (credit card) gets paid on the 22nd of each month, so I set up my automatic transfer for the 25th. This way, I know all my bills will get paid first.

If I have extra money left over at the end of the month, I can have Ally transfer it over whenever I want. I highly recommend getting an Ally accout. They have one of the highest interest rates out there right now.

I hope that wasn’t too long. I really wanted to cover everything for you guys so that you could follow along.

If you have any questions at all or just need some more help, PLEASE feel free to reach out. That’s what I’m here for! 

What are you guys saving for right now? Let me know in the comments below.

Thanks for reading! If you want to keep up with the latest happenings, you can subscribe or contact me if you’d like to talk personally.

XOXO

Nikita Barry

Your life. Simplified.