Saving: Two Ways to Save $5,000 In A Year
For many people, particularly part-time working students and entry-level professionals, saving can be a daunting task. Sometimes, the end target simply seems too high, but it’s easy to get some perspective when things are broken down week by week, or month by month.
The following two examples will illustrate how it is possible to save $5000 over a year, in a non-interest bearing savings account.
Saving Bi-Weekly Over a Full Year in a Standard Savings Account with No Deposit
This is the easiest and straight forward way to save money for many people. You just set a certain dollar amount to be deposited in a non-interest savings account. This can be done using your bank or credit union savings account.
In this example, to save $5,000 in a year on a bi-weekly basis, you would set aside $209 every two weeks. This works great if you get paid every other week. In Table 1, you can see that saving $209 bi-weekly means you are saving a total of $418 per month. As you continue, you notice that the savings balance increases month after month.
One key problem with a bi-weekly savings plan is that for most people, the first paycheck in the month usually covers their largest expense – rent or mortgage payment. This expense can eat up most of that first paycheck. What do you do? Create a budget to see what is left over after paying your expenses & debts at the end of that first bi-weekly paycheck. If you have at least $209 leftover after each pay check, then the bi-weekly plan can work for you.
Saving Monthly Over a Full Year in a Non-Interest Savings Account with No Deposit
If you are unable to save $209 on a bi-weekly basis, can you save $418 each month? Maybe, with the second paycheck, you have more funds available to put toward savings after paying your largest expense earlier in the month. Table 2 shows how regular saving amounts of $418 each month can add up to a savings of $5,000 in a year in a non-interest bearing account.
This is not the most effective way to save but useful if you are new at saving and want to start right away.
Create a Budget to Save Consistently
The best way to know how much you can save is to create an effective budget. Having a budget where saving is included helps you save consistently. The only way to reach your savings goals is to be consistent. Understandably, life events can occur which can interrupt that plan. However, try to get back at it as soon as possible.
Life Skills Instructor offers two video lessons that cover how to create a monthly and a bi-weekly budget. You can learn more about the budget courses here, https://lifeskillsinstructor.com/courses/read-budget-paycheck/
If you are a member of Just Do It Afraid, those lessons are available to you now for viewing
In a later post, I will provide a better option for you to save $5,000 in a year.
Let’s hear your questions.