Financial stability is everyone’s dream after retirement. We work everyday to save up for our family and prepare the future of our kids. However, for some reason, the ‘saving’ part gives us quite a challenge, and everyday expenses usually cause issues both on budget and savings.
Here are the three most basic tips on drafting your basic financial savings plan to help you pave your future.
Make your rough draft
In a sheet of paper, write down all major anticipated expenses from now and by the time you retire (or whatever date you pick for the future). You don’t have to be very accurate, just make a good guess as to when you plan to have kids, buy a new home, etc. The idea of this step is to make a framework, not to get things completely detailed.
Determine savings needs
As soon as you’ve listed your estimated major expenses for the future, it’s time for you to work backward and make an annual budget. If for example, you want to buy a sports car worth $20,000 in 7 years, then you need to save roughly $2,860 per year for the next seven years. The calculations for this can be a bit more complicated than this, but this is the most basic way to do it. Break down your anticipated expenses in chunks and try to make a yearly, monthly, and weekly savings for everything you want to have.
Modify your master plan
You have you annual budget for various goals/things you want to have in the future, now ask yourself this – are “these expectations realistic?” You may result to some very ambitious goals, and though there’s nothing wrong with dreaming, you have to adjust your target spending (maybe get a new budget for a car worth $15,000 or less), or delay some of your spending (plan to save up for the car of your dreams in 10 years).