The Savings Strategy That’s Preparing Me for the Future

If I were to ask you how much you need to save to cover all of your expenses for the new year, would you be able to tell me?

Do you know how much you spend on birthdays? How about Christmas? Do you spend money on back-to-school shopping? Do you cover any of these expenses with a credit card?

Before having a solid financial plan, I had no idea how much I really spent on forgotten expenses. When you go to the store to buy a $50 birthday present, you don't realize how much you spend throughout the entire year on birthdays. For example, if you have five birthdays that you spend money on during the year, and spend about $50 for each one, that's $250.

Could you cover that cost today without using a credit card? It's only $250, but for a lot of people, not being financially prepared for these types of expenses leads to debt.

Budgeting and saving have a lot to do with numbers, but they also have to do with organization. If you don't know how much you are spending or where your money is going month-to-month, or even for the entire year, you will fail and have a higher chance of falling behind.

If your budget does not include an effective spending or savings plan for upcoming expenses, it's not complete.Click To Tweet

You will always have moments where you come up short or feel like your budget failed you.

If you are only thinking about saving for retirement or huge life events, you're missing a part of the bigger picture. If you live paycheck-to-paycheck, are trying to pay off debt, or have income restrictions, it only takes one unexpected or forgotten expense to derail your budget.

Here's how I prepare and create an effective savings and spending plan.

LEARNING HOW TO SAVE

It's never easy to develop a new habit or start a new routine. If you have never saved money on a regular basis, it can be hard at first. Saving is difficult, but spending money isn't. You have to develop the habit of saving, and you can only do that if saving becomes a part of your lifestyle. A good way of making savings part of your lifestyle is by automating it. Check out CIT Bank Savings Builder account.

• Read: How to Save Money for Upcoming Holidays and Events

DEVELOP SPECIFIC SAVINGS GOALS

For me, I have many savings goals. In fact, I determine my savings goals for the entire year before it even begins. You can only form new habits when you adopt specific behavior patterns. Saving has to be a regular part of your spending plan for it to become a habit. For me, I save money almost every single week.

Not only does saving have to be a regular part of your routine, but there has to be an underlying motivation on why you are saving. I think for most people, and for me especially, I save cash, so I don't feel pressured to use my credit card. Not going into more debt or using my credit card, is the motivation that keeps me on track with my spending and savings goals.

So how do you develop specific savings goals? I use a monthly calendar to help me map out the entire year before it begins. My schedule helps me determine which holidays or special events I need to prepare for and it gives me an estimate of how much I need to save.

The first thing I do is go month-by-month and write down on my calendar every major holiday. I then write down recurring birthdays that I spend money on year-after-year. Next, I write down any known occasions that will be happening. For example, if I know a friend is getting married in June, I will write down their wedding date on my calendar. Do you have a family member that is graduating in the new year? Make sure to write this event down on your calendar.

Any event or holiday that you spend money on throughout the year should be written down on your calendar. Plain and simple.

Next, I go through my calendar and write down a specific savings goal for each holiday or event. If you are not sure about how much money you will spend on a particular occasion, you need to analyze your spending from last year. For example, are you unsure about Christmas expenses? Look at your bank statements or expense tracker from the previous year and use that amount as your savings goal.

• Read: Where to Invest Your Money for Short-Term Savings Goals

ORGANIZATION. ORGANIZATION. ORGANIZATION.

One of the most common answers or statements I receive from people that I have coached on using this savings technique is that they feel overwhelmed.

Looking at your savings goals for an entire year can seem overbearing. You have so much you want to save for, and so many holidays and events you spend money on that it can look like too much. Before you know it, you are saving for twenty different things, and have twenty separate envelopes.

I have learned over the years that lack of organization, not just for your budget but for your overall financial life can harm your finances as much or even more than being short on cash. That's why it's crucial to have a savings plan that is easy to follow, is organized in a way where you can see the big picture, tells you exactly how much to save, and when to save it.

I have created two savings worksheets that help me stay motivated, on track, and prepared for any expenses that might come up.

YEARLY SAVINGS GOALS & EVENTS WORKSHEET

After your savings goals are written down on your calendar, it's time to develop your savings plan.

The first worksheet that I use is the Yearly Savings Goals & Events Worksheet. I go through every month on my calendar and write down every holiday and event on my worksheet. After writing the description, I write down the total amount that I would like to save for each goal. If you want to save money monthly, You need to write down how much you need to save every month up until your goal due date.

For example, if I want to save a total of $50 for Easter, and I start saving in January, I only have three months to save a total of $50. You divide your savings goal of $50 by three, which means you need to save $17 every month starting in January.

Even though Easter is in April, you want to make sure you have the cash before the actual date of the event or holiday. You will need time for shopping, decorating, planning, and other holiday-related expenses. For me, I always plan to have the cash available a month earlier than the date of the event or holiday.

I use the Due Date area of the worksheet to write down when I would like to have the cash available. For my Easter example, I would write down March, not April. Remember, I want to have my savings accumulated BEFORE the actual date of the event or holiday.

YEARLY SAVINGS TRACKER

The second worksheet that I use is the Yearly Savings Tracker Worksheet. Tracking your progress as you work your way towards your savings goals is extremely important. You want to be able to quickly see if you are on track to meet your goals.

Being able to visualize your goals, and organizing them in a way where you can see all of your savings goals in one place helps with the overwhelming feeling you might get from having multiple savings goals. This worksheet enables you to do that!

The first step is to write down your savings goal description. Next, write down the total yearly amount that you would like to save. The area to the right of your annual savings goals is a monthly tracker. Use the due dates that you wrote down on the Yearly Savings Goals & Events Worksheet, and highlight the month that you would like to have the cash available.

For example, I would highlight the March box for my Easter savings goal. Use the other boxes to write down how much save each month.

Read: How I Saved Money and Paid Cash for My Cabo Vacation

Having “saving buckets” for holiday and event spending will help with overspending and will prepare you with cash, rather than putting these expenses on your credit card.

When creating your savings goals, the more specific you are, the better. It's not enough to say, “I want to save $300 for Christmas.” You need to be able to map out a plan and create action steps that will help you accomplish your goals.

Using these savings goals worksheets will help you get there! I love keeping them in my Budget Binder every month so that I can track my progress. If you want to be financially prepared for the future and create a savings plan with clear actions steps on how to be successful, this savings system is fantastic!