My husband and I have been able to save a substantial amount of our modest income by using a simple plan. We call the plan the bigger the income, the bigger the savings. I give the credit for the name to my creative husband. He inspires me to be more creative. You can probably tell by the name of this system that the more you make, the more you came save. The concept is very simple.
The first step is to calculate your income. Income will be made up of all the ways you make money. There are many possible sources of income. These include, but are not limited to the following: interest, dividends, capital gains, paycheck, royalties, and rental income. Most of us only have paychecks as a source of income. Once you get your savings account started you will also get interest on your savings as another source of income. So write down all your sources of income and calculate the amount you are getting each month.
Step two is to calculate your expenses. Write down everything you spend. In order to calculate the expenses you might want to just keep a spending journal for a few months. I use an app that does this for me. It's called the mint app you can download it here. Before using this app I was doing everything manually and this app really makes it a lot easier. You link your credit cards and bank accounts to the app and it keeps track of all income and expenses for you. The expenses are categorized and you can edit the category because sometimes it gets those categories wrong.
Step three is to figure out the difference between income and expenses. Just subtract the expenses from the income to get your answer. That is the amount you have to divide into savings and "fun"money. My husband and I decided together what our goal for savings would be each month and then the rest was "fun" money.
These three steps are very easy but you have to be very meticulous and keep track of all income and all expenses down to the penny. You want to use accurate numbers when you decide how much is leftover. Then when deciding your goal for savings don't be too rigid. Leave some "fun" money so you don't ever feel deprived.
I will use this blog to help you get a big savings account and learn where you are spending too much and where you want to cut back. Please leave a comment if you have any questions or if you want me to talk about another money subject. I am not an expert but I have experience and have done a lot of trial and error to get to the point where I am able to actually save on a very modest salary. We truly believe that everyone can save and stop living paycheck to paycheck. With savings comes a sense of freedom that is priceless.
The first step is to calculate your income. Income will be made up of all the ways you make money. There are many possible sources of income. These include, but are not limited to the following: interest, dividends, capital gains, paycheck, royalties, and rental income. Most of us only have paychecks as a source of income. Once you get your savings account started you will also get interest on your savings as another source of income. So write down all your sources of income and calculate the amount you are getting each month.
Step two is to calculate your expenses. Write down everything you spend. In order to calculate the expenses you might want to just keep a spending journal for a few months. I use an app that does this for me. It's called the mint app you can download it here. Before using this app I was doing everything manually and this app really makes it a lot easier. You link your credit cards and bank accounts to the app and it keeps track of all income and expenses for you. The expenses are categorized and you can edit the category because sometimes it gets those categories wrong.
Step three is to figure out the difference between income and expenses. Just subtract the expenses from the income to get your answer. That is the amount you have to divide into savings and "fun"money. My husband and I decided together what our goal for savings would be each month and then the rest was "fun" money.
These three steps are very easy but you have to be very meticulous and keep track of all income and all expenses down to the penny. You want to use accurate numbers when you decide how much is leftover. Then when deciding your goal for savings don't be too rigid. Leave some "fun" money so you don't ever feel deprived.
I will use this blog to help you get a big savings account and learn where you are spending too much and where you want to cut back. Please leave a comment if you have any questions or if you want me to talk about another money subject. I am not an expert but I have experience and have done a lot of trial and error to get to the point where I am able to actually save on a very modest salary. We truly believe that everyone can save and stop living paycheck to paycheck. With savings comes a sense of freedom that is priceless.
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