Categories
Budgeting & Saving

Last Day of the Year: How Much Do You Have Saved?

The end of the year is nearly here! If you're like 45% of Americans, you're probably starting to think of resolutions for 2016. If you're like me, you might be regretting some of the resolutions you set in 2015 and didn't keep (I'm looking at you, running goals!) You may have set budgeting, saving, health, family, or any number of goals for yourself in 2015, and maybe you're thinking of continuing a lot of those goals into 2016.
Since you're a Young Finances reader, you've probably been better than most at keeping at least a few of your money goals. We'd like to know, how much have you saved this year? What were your goals for saving and how did you do?
If you're interested in determining your saving rate, you can look at it a few ways. Here's how to determine how you did on saving this year:

The 50/20/30 Method

One way to evaluate how well you did on your saving goal this year is to see if your spending and saving followed the 50/20/30 method. LearnVest outlines examples of how this method works but here are the basics:
  • 50% of your take-home pay (after taxes) goes to fixed expenses like rent, utilities, food, and fuel. LearnVest lists student loans under "financial goals" and not fixed expenses but I would include student loans under your fixed expenses. Unless you make so little, or you're in school and can defer your loan payments, every lender considers your loans non-negotiable. You have to pay your student loans, unless you get a forbearance or deferment. If you don't, you'll go into default and damage your credit among other repercussions. Student loans also cannot be discharged in bankruptcy. Bottom line: they're a fixed expense!
  • 20% of your take-home pay is for savings and other financial goals. This is where you get to calculate some of the fun stuff! What were your 2015 saving goals? Take a look at your savings or investment accounts, and see if you put at least 20% toward saving of some form. If you were able to save or invest 20% of your take home pay, you're on the right track! No worries if you weren't, though. Any amount of saving puts you on the right track. For 2016, you can always find additional ways to hustle and thus be able to save more moolah.
  • 30% of your take-home pay is for flexible spending like shopping, entertainment, and hobbies. It's just fine if you spent less than 30% on hobbies or entertainment. Some people prefer to save their money for big ticket items, like travel, instead of spending money throughout the year. If you spent more than 30% of your take-home pay on flexible spending, though, you'll definitely want to go back and read more Young Finances articles.

Emergency Savings Evaluation

For some of us, especially those who've just graduated and maybe aren't making a huge salary, sometimes your saving goal is determined by your emergency savings. If you have emergency savings, you're doing really well!
Take a look at your emergency savings right now. See if you have enough saved to cover at least 3 months of expenses. For example, if your monthly fixed expenses come to $1,000, you should have $3,000 in your emergency savings. Even better is 6-9 months of emergency savings.
If you don't yet have enough saved to cover 3 months of expenses in case of a job loss, this should be your biggest priority in 2016. No matter what age you are, emergencies can happen at any time. It doesn't make sense to put money you don't have on a credit card with a high interest rate.
For 2016, let's make saving a priority! By evaluating your saving rate in 2015, you now know where you're doing well and where you can improve.
How much were you able to save this year, and how did you do it? If you'd like to see more articles on how to save, let us know!
[Tweet "How much were you able to save in 2015?"]

Originally posted 2015-12-30 10:00:20.

Categories
Budgeting & Saving

I Forgot Day: 5 Tips to Make Sure You Don’t Forget to Save This Year

I bet you forgot it, huh? No, not your brother's birthday... I Forgot Day! I Forgot Day fell on July 2 this year, and it's a day celebrated by apologizing to people whose important days (birthdays, anniversaries, etc.) you forgot over the year. Don't worry! While the day itself may have passed, we can celebrate I Forgot Day year 'round when it comes to not forgetting about saving.
We all like the idea of saving, but how many of us consistently forget to save regularly? Here are 5 tips to make sure you don't forget to save this year:

Make Automatic Deductions for Retirement

You can't forget it once you set it! Make saving automatic by setting up a direct deposit straight into your retirement account. How much you choose to save is up to you and your budget, but most financial planners recommend setting aside 10% per paycheck for retirement.
The best part about putting part of your paycheck into a retirement account, such as a 401(k) or Traditional IRA, is your tax status. If you set up an automatic deduction from your paycheck through work into a retirement account, this reduces your taxable income. Automatic retirement savings and less in taxes? Win-win!
[Tweet "You'll never forget about retirement if you automate the savings process!"]

Pay Yourself First

Beyond saving for retirement, remember to pay yourself first. Come up with a system where you pay yourself first. After all, if you're not cared for, you can't care for anyone else. This is especially important if you're a parent or a business owner. Don't forget about yourself.
You can get a jump on next year's I Forgot Day by setting up automatic deductions from your paycheck into your savings account. Again, how much you save is up to you and your savings goals, but 10% of your monthly paycheck is a good rule for your savings account. You probably won't even miss 10%.

Make it Fun

You'll never forget your savings goals if you give your account(s) fun names like 'Travel to Hawaii to see the Dolphins' or 'My Awesome Mansion Fund'. If your bank offers you the option of naming your own savings accounts, go ahead and give them big, audacious names. Or stick with practical names, like 'My Just in Case Fund' or 'Chill Wedding Fund.' Do what makes you happy.
Whatever your goal, own it by naming it. Check on the account regularly. It's harder to forget adding to your savings account when it bears a memorable name. Plus, we name everything else we care about - our car, our dog, our children... why shouldn't we also name our bank accounts?

Save Your Change with a Goal Jar

Save that spare change in your pockets by setting up a goal jar. While a goal jar full of change won't accumulate as quickly as your retirement or savings accounts, you'll be surprised by how much money you'll add to the jar.
You won't forget I Forgot Day if you keep your goal jar in plain sight. Consider placing it atop a table which can be seen right when you walk in the front door. This will keep the goal jar fresh in your mind and remind you to go through your pockets or wallet for change every day. Physical reminders are powerful.

Make it a Habit

Setting up automatic withdrawals, giving your accounts fun names, and keeping your goal jar will go a long way to making saving money a habit. Beat I Forgot Day forever by making saving money a daily habit. Set a time, weekly or monthly, to check on your savings accounts and savings habits. After a few months of regularly saving habits, you'll realize saving money can be second nature.
By making saving a habit, you'll never need I Forgot Day to remind you to save. In fact, you'll be so good at saving, you'll forget I Forgot Day! That is, unless you always forget your brother's birthday!

Originally posted 2015-08-10 10:00:32.