Creating a Savings Plan that Works

It’s easy enough to say you’re going to save more money each month, but making it happen can take more effort than you expect. Without having a strategy in place, it’s easy to get tangled up in shifting priorities, recurring expenses and unexpected costs. Staying on target with saving goals can start with these steps:

Track spending. Whether you track your transactions online or write down your purchases, or both, take the time to see where your money goes. At the end of the month, review where you can cut spending moving forward and budget more effectively. Repeat this process each month if you can.

Choose your priorities. Instead of simply making a list of everything you want to save for, define your priorities and estimate how much money it will take to reach them. Defining your goals makes it less likely you’ll forget or stray from them.

Specify target amounts. To make your savings plan actionable and focused, start with the most important and immediate item, and go from there. If it’s not on your list, having an emergency fund with enough money to cover three months’ to a year’s worth of living expenses is highly recommended.

Set a time line. Looking at your goals, you’ll probably see a mix of short-term and long-term ones. Break down the latter into monthly steps to make getting there more manageable. And set deadlines for reaching each objective- being specific can help.

Consider available savings options. Instead of having one account for all your savings goals, determine which types of accounts can help you. A regular savings account can be good for an emergency fund, but there are more specialized accounts for other goals, including some that can provide tax advantages. Among these, for instance, are 529 plans to save for a child’s college costs, individual retirement accounts and health savings accounts to cover anticipated medical costs.

Go automatic. If you get regular paychecks, have them directly deposited and set up an automatic transfers to savings. This way, you’re less likely to notice the money isn’t available to spend. That can be especially helpful when saving for long-term goals and allocating 5% to 10% of your income for retirement savings.

Re-evaluate monthly. Check regularly to see whether you’re in line with your savings goals. If not, see what you need to change your spending or whether your goals are too ambitious. Priorities can also evolve over time, so reassess your goals periodically and adjust when needed.

Whatever your objectives, from a summer vacation to retirement, a savings plan can keep you organized and supply the motivation to make each month count.

For more money saving tips, check out more awesome NerdWallet articles, tips and more at or follow them at @NerdWallet.


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