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How To Set Up A Monthly Savings Plan For The New Year

by Dec 30, 20211 comment

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Did you know that 44% of Americans pledged to save more money in 2021? For the first four months of the year, people saved about 17% of their income. However, the average personal saving rate started to dip by the time June came around. This shows that a lot of people don’t actually have a consistent monthly savings plan.

What’s a monthly savings plan?

A monthly savings plan is a plan to save a set amount of money every month. This can be a percentage of their income, typically from 10-30% of their earnings. For others, this can be a set amount like $50, $100, even $500 a month. How much you aim to save will depend on a lot of things, like your income, expenses, and responsibilities.

But trying to come up with a monthly savings plan for the year from scratch can be a challenge. To help you set your monthly goals, here are 20 tips you should know:

1. Start with a monthly savings plan template


Templates are always a great place to start when trying to come up with a monthly savings plan. One of the most popular savings templates is the 50/30/20 rule. People who follow this rule allocate 50% of their income towards needs and then 30% towards wants. The final 20% is then dedicated entirely to savings. If you don’t know how much your monthly savings plan should be, this framework is a great place to start.

2. Calculate your ideal monthly savings plan


Templates are a great start, but they’re no replacement for a calculated monthly savings plan. First, find out how much you’re making every month. Then, subtract this by your monthly expenses. Whatever you’re left with is money you can allocate towards wants, investments, savings, and more.

3. Stick to it!


Don’t be part of the 80% of Americans that drop their New Year’s resolution by the second week of February. If you want to be financially free, saving consistently every month is something you should always do. If you need help getting started, then check out my article on getting into the money-saving mindset.

4. Account for every penny with your monthly savings plan

Financial expert Dave Ramsey recommends that you should always account for every penny. This is, so you know where all your money is going. Remember: money that isn’t being saved, invested, or spent is money that’s not being put to work.

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5. Set up an automatic deposit

Sometimes the best way to beat temptation is to remove it entirely. That’s why you should set up an automatic deposit every time you get paid. This eliminates the temptation to spend your money completely because it’ll already be in the bank.

6. Pay the bills on time

Late fees are a pain that nobody wants to deal with. If you can pay your bills on time, then you’ll never have to worry about late fees. You might also want to set up an automated bills payment system.

7. Don’t feel your monthly savings plan is high enough? Get a side hustle.

Ideally, your living expenses shouldn’t exceed 50% of your income. If your expenses are eating too much into your income, you won’t be able to save effectively. Getting a side-hustle can be a great way to increase your take-home pay. Check out my article on side-hustles if you need a few ideas.

8. …Or a better-paying job

Unfortunately, you might not have 10-20 hours every week to devote to a side-hustle. In that case, you might want to look for a higher-paying job. Check out my article on ten high-paying jobs that don’t require a degree here.

9. Be prepared to meet a few sacrifices for your monthly savings plan

To meet your savings goal every month, you will have to make a few sacrifices here and there–and that’s okay. Repeat after me: your financial freedom is more important than any trip to Bali or new pair of shoes.

10. Subscriptions eat into your monthly savings plan

As much as possible, try to limit your subscriptions to two or three at most. Things like Spotify and Youtube Premium can be great, but only if you use them often. You also don’t need to subscribe to Netflix, Hulu, Prime Video, and Disney+ all at the same time. $25 a month for subscription services will add up to $300 a year.

11. Cut up those credit cards


The number one enemy of savings isn’t $4 coffee, though that definitely doesn’t help, but debt. Take it from someone who at one point owed $169,000; you don’t want to be in debt. There’s a reason why Dave Ramsey tells people that credit cards aren’t worth the risk.

12. Make sure an emergency fund is part of your monthly savings plan

Emergencies can happen anytime and anywhere, so it’s best to be prepared. Try to devote a portion of your savings every month towards your emergency fund. Ideally, this should be about six months’ worth of your expenses, like rent, food, and bills.

13. Retirement should be a part of your monthly savings plan, too

You should also devote a portion of your funds towards retirement as soon as possible. That way, you can get compound interest and see more and better returns. 

14. Set some cash aside for investing

Do you want to earn money for doing almost nothing? Of course, you do! That’s why you should take the time to learn about investing and investment platforms. If you’re interested, here are my recommendations for 12 books about investing that you should definitely read.

15. You’re going to miss the mark at some point with your monthly savings plan

Especially if you’re a beginner, there will come a month where you don’t meet the monthly savings goal. It’s important to remember that this happens to everyone, including myself. What’s important is that you find out what went wrong and learn how to prevent it in the future. Don’t give up just because of a single bad month.

16. Don’t think that your money is guaranteed

To a certain extent, job security is a lie. At any point, your company can choose to fire you, or your business might go under. That’s why you should always keep your career options open and never act as if your money is guaranteed.

17. Remember to look at each month individually

It’s not enough to set the same monthly savings plan every month and call it a day. Naturally, some months will see you spending more money than others. For example, you’ll probably be spending more during December or for your birth month. Keep these in mind when setting a monthly goal for these specific months.

18. Talk about your monthly savings plan with your peers

Talking about your financial goals with like-minded individuals can be a great way to put them into perspective. Doing this can help you evaluate your short-term and long-term financial goals. You might even be able to learn a few money-saving and budgeting tricks from them, too.

19. Set up an accountability system

To keep your monthly savings plan, you need to hold yourself accountable. Implement a penalty, like no takeout for two weeks, whenever you don’t hit that financial goal. This provides tangible incentives for you to hit your goals.

20. Keep finding ways to save money

You should never cut yourself off from learning new things, especially when it comes to finances. There’s always more to know no matter where you are in life. That’s why you should sign up to join my financial fam. As a member, you’ll receive personal financial advice from me every week, for free. This includes insider information and even the occasional freebie. Did I mention that signing up costs absolutely nothing? So what are you waiting for? Sign up today!

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Carola Jain
2 months ago

Setting up a new savings plan doesn’t have to be a terribly difficult endeavor, as this piece goes to show. It’s a simple matter of building a plan and sticking with it. Good insight here!