Don’t you just love looking at your bank account and watching the number grow bigger and bigger over time? I know I do! Did you know it’s possible to get that number to grow much higher and faster than ever before? The secret: get on an aggressive savings plan!
Why should you have an aggressive savings plan?
An aggressive savings plan is a simple concept–it’s a budgeting strategy for maximizing your savings. When you have an aggressive savings plan, you’re specifically budgeting more of your funds towards your savings. Here are five reasons why you should have one:
To hit your financial goals sooner
We’re eight months into the year at the time of publishing this article; what’s your progress on those financial goals? An aggressive savings plan will help you hit your savings goal for the year if you’re committed to it.
To prepare for a career change
Career shifting is a great way to earn more money. You might not have the skills to shift into the career you want. For example, if you’re going to transition into IT, you must learn some coding. Having an aggressive savings fund before shifting careers will help keep you afloat while you learn the skills you need.
To save for retirement
It’s never too early to think about retirement. Whenever you put more money into your retirement funds, you’re setting yourself up for a life of comfort.
To build an emergency fund
An emergency or rainy day fund is a savings fund specifically for emergencies. Ideally, this should be about six months to a year’s worth of expenses. This will help you stay afloat if you’re out an income stream.
To give yourself some extra funds
Who doesn’t like having some extra money, just in case? An aggressive savings plan can help give you some additional funds when all the essentials you need are covered.
When’s the best time to use an aggressive savings plan?
There is no “best time” to use an aggressive savings plan. While it’s wise to save more, you might not be able to devote so much of your income to savings. The best strategy for the future is the one you can consistently follow without having to dip into savings. That being said, there are good times to switch to a more aggressive savings plan, such as:
When you get a raise
It’s a good idea to switch to a more aggressive savings plan when you get a raise. You can put whatever extra money you earn from that raise into your savings. This must be done while still keeping the same budget for everything else. This helps you avoid lifestyle creep–when your income increases, your lifestyle becomes more expensive.
When you’re planning to take a risk
About to quit your job or open a business? Saving more aggressively before doing so will give you some extra funds to fall back on.
After depleting your savings
Let’s say you just came from paying for an emergency trip to the doctor. Is it time to start going on a shopping spree? Of course not! It’s better to begin rebuilding your emergency fund as soon as possible.
If you can be content with less
You might have realized that you don’t actually need to spend so much money. By switching to more affordable alternatives, you’ll free up more funds for saving.
If there’s a short-term expense coming up
Let’s say your friends want to take a semi-spontaneous road trip, and you have just a few months to save. A more aggressive savings plan could be in order if you want to go without compromising your savings.
Thinking of taking a vacation sometime soon? Check out my guide on how to vacation at a bargain.
How to have an aggressive savings plan
It’s not easy to shift to an aggressive savings plan. Thankfully, there are a few practices you can do to make it easier to have one. Here are 10 things you can do to have a more aggressive savings plan.
Eliminate debt
Before anything else, you have to take care of any debts you may have. This includes student loans, credit card debt, and more. Being debt-free means you’ll have much more money to add to your monthly budget.
Want to know how to become debt-free as soon as possible? Check out my list of tips for a debt-free life.
Save at least 20% of your income
There’s a popular budgeting strategy called 50-30-20. With this strategy, you allocate 50% of your income to needs, 30% to wants, and 20% to savings. The 20% is your baseline for savings, but you can always try to save even more every month.
Max out your retirement accounts
There are quite a few retirement accounts you can put your money in. The more money you put into your retirement accounts, the more money that’ll compound over time. Some employers will even match your contributions for some retirement accounts, like the 401(k). Why say no to free money?
Want to know more about one of the best retirement accounts? Check out my article on the Roth IRA.
Cook your own meals
Cooking most of your meals at home will save you more money when compared to constantly eating out. When you eat out, you don’t just pay for the food. You pay for the tip and the transportation it takes to get to and from the establishment. Cooking meals at home takes time, and it can even be fun!
Limit expenses
You might be overspending somewhere in your budget. Identify where you’re spending more money than necessary and take care of it. It’s a bit of a sacrifice, but I never said having an aggressive savings plan was easy.
Stick to water
Drink prices at restaurants are highway robbery. $3 for an iced tea that doesn’t even cost a quarter of that to make? You’re better off just ordering service water when dining out. Little things like this help you have an aggressive savings plan.
Best way to enforce an aggressive savings plan? The cash envelopes system
Try the cash envelopes system if you can’t trust yourself to stay away from your debit card. With this system, you’re not allowed to spend money that’s not in the form of cash on hand. This prevents the number one enemy of the aggressive savings plan: needlessly dipping into your savings.
If you want to learn more about the cash envelopes system, check out my article!
Don’t cheap out on health, even on an aggressive savings plan
Dentist visits, health check-ups, and medicine are all just as important as food–especially now. No matter what you cut out of your budget, it’s not a good idea to cheap out on health.
Coupons
Coupons are a lifesaver when living on an aggressive savings plan. When you add up coupon savings over time, they can save you massive amounts of money.
Leave some funds for yourself
The best savings plan is the one that you can consistently commit to. Leave some funds to treat yourself every once in a while. Your happiness is an investment too!
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