Where Will My Savings Go? How to Make a Savings Plan for the Future

You need to prioritize your financial health not later but now. The first step to ensuring that your financial future looks bright is by committing to a strict habit of saving. Ideally, the moment you join the workforce, you start allocating a portion of your income to savings. These days, you cannot afford to be complacent.

You don’t know how the global economy or politics will shift against your favor, putting your job at risk. You do not know when a health emergency will strike, involving you or a loved one. You can’t be certain how a global health scare can impact your finances. It’s best to be proactive and, yes, save for the future.

Sure, it’s not an entirely easy habit to adopt. You work hard and sometimes you feel like you just want to reward yourself with good stuff. Maybe it’s a new pair of sneakers or a cup of your favorite coffee concoction to start your day. While there’s nothing wrong with enjoying the money you earn, you cannot neglect to save.

Here are some tips to help you jumpstart your savings plan.

Step #1: Know what you’re saving for.

Look at saving as a goal. As such, it requires an action plan. For your action plan to be doable, set a SMART objective. SMART stands for Specific, Measurable, Achievable, Realistic, and Time-bound. Use these criteria to guide your savings plan.

If you’re new to saving, start with a simple plan. If you’re saving for the down payment for a new car, you’ll need a dedicated savings account. Ideally, you don’t use this account for other expenses. And if you can automatically set up your main account in a way that allows automatic transfers to your savings account, the better.

Step #2: Understand your cash flow.

This is where the barometers Measurable, Achievable, and Realistic come in. Your source of income should allow the realization of these criteria. You need to discern the right amount to deduct from your monthly earnings.

Your goal is to allocate enough portion of your salary to your savings account without putting yourself in dire financial straits. No, you do not want to lose weight because you end up cutting your weekly grocery budget. You might compromise your health doing so.

You may entertain expanding your cash flow. On top of your full-time job, you may pursue gigs that will pay you for your skills and talent. For example, you may consider a side hustle as a virtual assistant.

Read: 3 Side Hustle Ideas to Finance Your Life Insurance     

Step #3: Look for unnecessary expenses you can cut.

Your savings plan should be time-bound. That will give you the added motivation to hit your target. Goals that lack a specific timeframe often suffer from neglect. So do not make that mistake.

To honor your set schedule in which you want to hit your savings objective, be mindful of your expenses. Separate wants from needs. Maybe you’re used to going to the spa twice a month. Now that you’re saving up, it’s time to ask yourself whether that expense is something you can do without—or at least reduce. A monthly trip to the spa, instead of two, would be a clever compromise.

Read: 5 Luxuries You Can Live Without to Save More Money [Infographic]

Step #4: Make a budget.

It’s high time you learned the art of budgeting. Sure, it’s another to-do on your probably already hectic schedule. But it’s worth the effort. Spending without a specific monthly or weekly budget is the number one enemy of your savings plan. You’re always at risk of shelling out more than what you intend or have to.

To ease yourself into the habit of budgeting, start with a daily allowance. At all costs, stick to it. Once you get the hang of spending according to your daily allowance, transition to a weekly budget. Once you get that down pat, level up to monthly budgeting.

Read: 10 Excel and Google Sheets Tips for Budgeting Like a Pro

Step #5: Consider investing in a life insurance savings plan.

Your savings should stay as such until you reach your objective. Unfortunately, emergency expenses happen. Think, for instance, medical-related emergencies. There’s a way to avoid sourcing out money from your savings even when a health crisis strikes. You may put your money in BPI AIA’s life insurance savings plan.

That’s like shooting two birds with one stone. You get to save while having the added protection of insurance coverage.

Step #6: Invest.

You may use your savings to invest. Options at your disposal include stocks and bonds. Just make sure you learn the ins and outs of the stock market before getting into it. You want to be informed so you can take calculated risks. Investing in assets diversifies your financial portfolio. The money you saved doesn’t go stagnant.

Read: Are You Afraid of Investing? Here are 6 Reasons Why You Shouldn't Be

Save to safeguard your financial future

If you save for the future, you’ll have peace of mind today. You know you’re prepared for whatever is in store for you in the next five or ten years. Yes, it’s worth every sacrifice you’ll have to make. Not to mention, you’re the one who will eventually reap the rewards of your patience and compromise. Consider your savings plan as part of your insurance.

Speaking of insurance, if you’re in the market for comprehensive insurance coverage, consider talking with one of our Bancassurance Sales Executives online today. Rest assured, with BPI AIA it’s easy to get coverage even amid the pandemic.