Saving money is one of the most commonly discussed topics and you have probably been told a thousand ways to do it. Now that you have set up a savings account the question becomes “How much exactly should I be saving?”. This is where the lines get a bit blurred as answers range from “half of every paycheck” to “$100 a week”. To help you figure out how to properly save for your future we have set up a series of blog posts detailing how to save daily, weekly, monthly, yearly, and over your lifetime.
As we established in last week’s post, saving just a small amount each day can lead to accumulating a surprising amount in the future. As useful as saving your loose change everyday is, it does not substitute for an actual savings plan. This is where setting weekly budgeting goals can really pay off.
The first step to figuring out how to budget weekly is to find how much you make per week. For people who earn weekly salaries, this is easy, and if you have a steady monthly paycheck just divide your salary by ~4 to find out how much you make a week. If you have a job where your salary varies (such as waiters/waitress) take the average of your past earnings to figure out how much you make in a week.
Now that you know how much you make per week you can fit it into the 50/30/20 budget management strategy. This budget has you spending 50% of you budget on necessities, such as groceries, insurance payments, gas, rent, etc. Once you have paid off the necessary expenses it suggests you put aside 30% of your budget towards savings for the future. Finally, you are left with the remaining 20%, which can be put toward eating out, going to the theatre, or any other fun item/activity your heart desires.
Although it is not suggested, people inevitably overspend in some areas, or have necessary costs exceeding their 50% allocation. In these cases, you can tailor the 50/30/20 budget to suit your needs, just make sure that you do not prioritize wants over savings too often, as you will regret it later when some unexpected expense shows up.
Now that you can start following a weekly budget we will explore how to optimize monthly saving by utilizing saving accounts, IRA’s, and managing reoccurring fees our next ‘Saving for the Future Blog Series.’