Savings Goals - 6 Things To Do After You’ve Met All Your Savings Goals

You’ve done a lot this year. You have created a nice emergency fund enough to take you over three months of all expenses. That high interest debt you had? You paid it off too, and have started to siphon a nice percentage of your income towards your retirement.

All this is great work, but now what?

In case you are wondering how to save money beyond the basic steps, this article is what you should read.

Check your budget: Maybe you needed to have a strict budget to pay off a toxic debt. But now, with that over with, you can switch over to a 50/30/20 budget. If you are already using this budget model, reevaluate that and see what are your wants and needs. Thus, you’ll see that more money is available.

Take care of the low priority debt: You have paid back the high-interest debt first, and that’s a good thing. In fact, that’s how it should be done. But don’t stop now that it’s paid. Start paying off the low priorities debts.

Use your savings: A lot of people keep a significant part of their money in a savings account in the same bank that has a checking account. Perhaps you are doing this too. Now, this earns you maybe .06% interest a year. But this can grow faster. Consider moving your emergency fund or your savings into a different type of account. Consider Certificates of Deposits. These can lock up your money for a certain time while it earns a high interest rate. If you have extra savings, CDs can be a great option. However, these are not so good for your emergency fund since you may need it at any time. For emergency funds, a high-yield savings account is a much better option since these have a higher minimum balance requirement and have high interest rates.

• Don’t forget to invest: This is a good time to rethink how much you need to save up for your retirement. Perhaps you may need to start saving more for that, or even set up a personal retirement account. If you want to start building up a portfolio, reach out to a broker.
• Insure yourself: Revisit the basics like homeowner’s insurance and car insurance. Think about in which stage of life you are in, and what things you are preparing how.
• Think bigger: Till now, you have covered the basics. Now you can finally pay attention to savings goals and projects which you may have put off till now. Whether it is to start a new business, a family vacation, or perusing a new hobby, now is the time to do them all. Just focus on saving cash.
  

In the end, don’t forget to reflect back on all that you have achieved. Congratulate yourself on all your personal financial-related victories.

How to Budget Separately for Needs and Wants

There are some things which you do need, including having a roof over your head, having electricity to power up said home, having a car perhaps, and gas to power the said car. There are some things that you want such as movie tickets and gym memberships.

Here’s the good news! You can fit both of these into your monthly budget! All you need to do is to balance up your needs and wants.

And that is what we shall teach you to do in this article!
Find out what your Needs are

Let us start with what needs are, and how to differentiate them.

What are Needs?

These are the things that you absolutely need for survival. These are the bare minimum things which you require.

What does this include?

It includes things like home, food, clothing, rent, insurance, transportation, gas, electricity, power, utility, etc.

How to know if something is a Need?

Is it something you cannot do without? Think more on it. No, even if it is the latest movie, its ticket does not make it a Need, no matter how much you want it. Things that come from the emotion, as a rule of thumb, are Wants.
Find out what your Wants are

What are Wants?

Wants are like comfort food. These are expenses which allow you to have a life of comfort. These are also the things which you purchase for leisure. You can easily do without them, but these let you enjoy life more. For instance, you may not really NEED a cup of coffee at Barista, but if you WANT to have a good afternoon with your friends, it may be important for you.

A Need is having daily meals on the table at home. Bringing in takeout food or going out for dinner is a Want. You can do without the latter, but once in a while you may want to order takeout food or go out to eat at a restaurant.

What are some good examples of Wants?

Entertainment, taking vacations, gym memberships, designer clothes and coffeehouse drinks are some good examples of Wants.

By the way, did you notice something?

We included having a car in both Wants and in Needs?

Why?

 It differs from one person to another. What is a Need to you may be a Want for another, and vice versa. For instance, you may not be able to go to work without a car of your own, but another person may just want a car because he or she works from home or the office is very near. Here again, the type of car you may want differs too from one person to another. If you want to use it to ferry important clients to and from the airport, a luxury car is what you want. But if you just want to use it to go to the office yourself, a basic car may be what you want.

This holds true for small items too, such as basic articles of clothing, and luxury clothing.
Here’s how to budget for both your Needs and Wants

Well then, you have now learnt how to determine what are your Wants and what are your Needs. Now it is the time to figure out how to put them in your budget.

Start by writing all the things you spend money on per month. And yes, this is something you should do each and every month. And when we say write down, we mean note down everything from toilet paper to newspaper and everything in between. You can have as many categories you want, but keep it simple.

In the end, divide everything into two buckets: Needs and Wants. This means that while your home’s landline subscription shall come under Need, Netflix subscription is an expense which comes under Want. Most probably!

With this done, you add up everything and arrive at a total.

After this, it is time to budget the heck up. We recommend using the 50/30/20 budget. Under this budget model, you put 50% of your monthly income for meeting Needs, 30% for meeting Wants, and 20% of catering to Savings and Investments.
What if your budget is disproportionate?

In case you are facing this, there are a few tips you can use.

• Shake things up a bit: Look at your list again. You may have mixed Needs and Wants again!
• Trim your Needs down: For instance, choose the yearly subscription package instead of the monthly ones. That saves you quite a bit. Look for insurance which saves you money!
• Trim down on Wants: Mercilessly remove things you do not need, if these are taking a toll on your budget. For instance, really limit how many times you order takeout food.

Budgeting Mistakes - Mistakes You Are Making In Your Budget

It can be intimidating to even think of accounting for every penny you touch. However, you do not need a math degree to take care of your budget. With a little bit of instruction and practice, you can create a solid budget.

The biggest mistake you make is to not make a budget in the first place, especially at the unprecedented time we are in right now. In this article, we are going to tell you some of the most common and problematic budgeting errors people make, and how you can avoid making them. When you do have a budget, it is easier to be away from monetary blunders than when not having one.

Failing to track your expenses: It is essential to be accurate in your budget if you want to make progress towards your financial goals. For this, it is important to track your spending. Failure to keep track of this will bring you one step close to failure. Most people do not stop to take stock of how much money a month they have wasted per month on frivolous things, such as fast food. They underestimate their expenses, and thus, at the end of the month they find they had overspent! What you need to do is to keep track of what you are spending, for at least one month before making a budget. Ideally, keep track of expenses each month.

Neglecting retirement: This is more common than you think. People become so engrossed or busy in their day to day lives that they neglect their retirement, or rather planning for it. Here’s the thing though. The sooner you start saving for your retirement, the easier it shall be then the time to actually retire. It doesn’t matter whether you are a middle aged person or a teenager. Saving up for your retirement should be one of your biggest priorities. Most people think that saving for this is sacrificing money which they need at the present, but experts say that is doing it completely wrong! The money you save now will be paychecks after retirement. At a minimum, think about setting aside a part of your salary per month to meet your employer’s Provident Fund contributions. Make it a goal to save 15% of your income for your retirement.

Not having an emergency fund: This is a major problem for many. A lot of people do not save for an emergency fund. When you have an emergency fund, there is no need to use your credit card to get fast cash at a huge interest rate. If, right now, you do not have an emergency fund, make sure to set aside a certain amount per month for this purpose.

50/30/20 budget - How Much Can You Spend Every Month?

 What you want is less money going out than coming in. In other words, your expenses need to be less than you’re your net income. Thus, before you think of buying something substantial, create a budget which takes care of your wants and needs.
How much should you spend?

When it comes down to your spending, it will be a good idea to use the 50/30/20 budget. When you use this formula, you can devote 50% of your net income to meeting needs like insurance and rent, 30% towards vacations and gym memberships, and 20% to things like savings and debt repayment. As you can see, your needs come before your wants, and what you spend always depends on how much you earn.
Start with your net income

At the end of each month, or at the beginning of the next month, you get your salary. It may look like a huge sum at first, but there is a limit to how much you can buy with it or do with it. That is why you need a budget. Now, start with your net income, which is your income after payroll deductions and post-tax deductions. The sum you arrive at now tells you how much you can afford to spend on things, from groceries to rent to gym membership.

But what if the money is not enough? Well, it won’t hurt to ask for a raise at work, get a promotion, change your job to one with a higher salary, or even take up part-time work in addition to your day job. If you want to cut back on current expenses, there are a few things you can do. For instance, you can do carpooling instead of using your own car each day. You can use coupons to bring down prices as well.
Pay the necessities first


If you spend on everything you like, you won’t have enough for the things you must have. For instance, you spend on an expensive gym membership and find you don’t have enough for rent. So here’s what you need to do. Start with giving 20% of your income towards meeting needs. Pay yourself first, and then set money for retirement and emergency funds. Once this is done, go to meet your debts. Have outstanding credit card debt? Tackle these next!

The next thing to do is to subtract all your regular bills. For instance, if your monthly net income is Rs. 50000, spend no more than 15000 on utilities, rent, food and the like.
Leave room for wants

A budget that caters to just needs may not be sustainable for the long run. You need to see your wants as well. That is why you may want to dedicate 30% of your income towards it.
Be flexible

Be flexible and open to options. Whether you are moving to a new city or whether the cost of living in your hometown has increased, it all depends on your income and expenses. If your expenses are high, do check your budget and spending habits.