Most Americans are carrying some sort of debt – mortgage, car loan, student loans, credit cards, etc. And most Americans have trouble saving for emergencies or trying to meet other financial goals. It can be challenging to save and pay off debt when they are both needed. Here are three easy savings plans to kick start your efforts while still progressing through debt management.
ACCC hopes these easy savings plans help.
3 Easy Savings Plans
While most of your focus should be on getting out of debt quickly, savings shouldn’t be ignored. Even if it’s a small goal, having a cushion is one way to avoid more debt in an emergency. Additionally, it builds good financial habits. Take a look at these easy savings plans to see which works for you.
Budgeting for Savings
The first and perhaps easiest savings plan is to include a line item in the budget every month for the same amount. Since you are already making room to pay off debt, you can apply the same strategy to finding money for savings. Trim entertainment, dining out, groceries, clothing… a little bit from each category could be used to build your savings. Maybe it’s $50 a month or $100.
The dollar amount is really what you feel is realistic for your budget and debt repayment strategy. Don’t overextend yourself. It’s great to set goals, but make sure they are specific and attainable.
Savings Staircase
A savings staircase is all about steady incremental jumps. One example would be to save $1 everyday for a month. The next month you will climb up another stair. Therefore, in month two, you would save $2 everyday for that month. However, in the middle of the year it’s common to climb back down the stair interval. The savings amounts would be too high to tackle while eliminating credit card debt if they continued to escalate.
If you followed this for an entire year, you would save:
- January: $31
- February: $56
- March $93
- April: $120
- May: $155
- June: $180
- July: $186
- August: $155
- September: $120
- October: $93
- November: $60
- December: $31
This gives you a grand total of $1,280. That is a solid emergency fund!
Savings Ripple
Finally, a savings ripple gets bigger and bigger. Here is what a savings ripple might look like over the course of a year:
- January: $10
- February: $20
- March $30
- April: $40
- May: $50
- June: $60
- July: $70
- August: $80
- September: $90
- October: $100
- November: $110
- December: $120
The total is $780. This might be a great way to save for Christmas presents. You could reverse the amounts and start with the $120 in January and then get lower as the holiday shopping season approaches.
While saving money isn’t usually easy- or fun for that matter- it’s so, so important. Learn to balance spending, debt and savings to really have control on your finances.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.
