Money saving plans are important but not everyone knows how to make one. Everyone understands it’s important to save money — but that doesn’t mean everyone does it. Many people struggle to track their paychecks coming in, their payments going out, and whether those two things are properly balanced.
Don’t lose track of your financial balance. Learn how to create a money saving plan that allows you to pay your bills and set some money aside every month.
Step 1: Write Down Your Expenses
We all have rent and utility payments, but those aren’t the only places our money goes. You may have to pay for child care, or you may be working on paying off a student loan.
Your first step in creating a money saving plan is to figure out exactly — or as exactly as possible — what you’ll pay every month. Write out everything you spend in an average month. Every little thing you can think of that you spend money on should be included in this list. No expense is too small. When it comes to payments that fluctuate, like your electricity bill, go back through past billing statements to average out your costs.
Averaging out the past six months’ worth of bills is good; reviewing a full year of statements is even better.
While you’re taking the time to track down past bills to average out utility expenses, you might as well take the extra step of setting up autopay. Once you’re logged into your account with the utility company, it’ll only take an extra few clicks to set it up.
From then on, autopay will ensure that you never miss a bill payment again. This saves you headaches and hassles, but it also saves you on any unexpected late fees.
Step 2: Determine Where You Spend Most
Now that you’ve done the hard work of compiling all your monthly expenses into a single place, it’s time to start analyzing all those expenses. Group your expenses into categories that help you better understand where you’re spending money. For instance, you could add together your bar tabs and dinner bills into a single “going out” category. Your Netflix, Spotify, and other streaming costs can become a “subscription” category.
MoneyLion makes this step easier for its customers. Financial Heartbeat helps automatically track your spending habits. Simply link your RoarMoney account and any other bank accounts you have, and Financial Heartbeat will do the heavy lifting in compiling your most useful financial data. Just log into the MoneyLion app and swipe left until you reach the Financial Heartbeat section to see how much you’re spending and where you’re spending it. If you have a RoarMoney account, you’ll also get weekly emails analyzing your spending by category.
Step 3: Making the Cut
This is the hard part. With your full list of categorized expenses in front of you, push yourself to cut as much as you can. You want to be realistic; otherwise, you won’t even try to stick to the budget. However, you also want to be ambitious in cutting as much as you can. Could you eat out one less time per month? Any streaming services you haven’t used in a while could free up some space in the budget (at least until the next binge-worthy season is released).
Start with your biggest expense categories, but don’t forget to review smaller expenses, as well. Anywhere you can afford to cut a couple of bucks from your budget will help you save more money every month.
One less obvious expense could be any banking related fees you pay. If you want to reduce banking fees, you might consider switching your accounts to a RoarMoney account. There are no overdraft or minimum balance fees with MoneyLion, so if those costs are adding up for you, switching to MoneyLion is an easy solution. All the pesky bank fees are wiped away and replaced with one simply $1/month fee. It’s the best value in banking.
Any expenses you can’t cut should be considered necessities. These include groceries, rent, and any other costs you can’t live without. Budget for some fun stuff, but try to be frugal about it — especially if you’re already struggling to save money.
Step 4: Create Your Money Saving Plan
At this point in the process, you should have an understanding of what you have to spend every month, and what costs you can cut from your monthly spending. You can use that information to figure out whether your budget actually adds up.
Take your absolutely necessary monthly expenses, and subtract that from your monthly income. If your income fluctuates, approach it as you did with your utility bills. Average out several months or a year’s worth of income to figure out roughly how much you make every month.
After subtracting your expenses from your income, you should (hopefully) end up with a positive figure. That’s how much you can afford to save every month. If you end up with a negative number, that means you’re financially underwater. That’s a big deal. You either need to cut more expenses or increase your income — or else you’ll endlessly spiral deeper into debt.
Step 5: Track Your Spending
Now that you know how much you should be saving every month, you just need to track your spending and ensure you’re actually meeting your goals.
Check into your bank account regularly to review all your expenses and income. If you have a RoarMoney account, you’ll see this info in your MoneyLion app. While you’re there, you can check in with the Financial Heartbeat and track your progress that way.
Your Spend Score will track your spending habits and let you know if something’s out of whack, like if you spent too much over a weekend and need to whittle back your expenses next week.
Step 6: Grow Your Savings
After a few months of sticking to your budget, you’ll notice your savings growing, but that money doesn’t have to just sit in your RoarMoney account. Once you’ve built up an emergency fund, you can invest the excess cash to grow your savings even more rapidly.
If you’ve never invested before, you might think it’s only for Wall Street types, but that isn’t true. MoneyLion can completely automate the investing process. All you have to do is answer basic questions about things like your income, why you’re saving, and how risky you want to be, and Auto Invest will do the rest.
Since it’s another MoneyLion product, your investments will show up in your MoneyLion app, right alongside your RoarMoney account, Financial Heartbeat, and any other MoneyLion products you’re using.
Repeat as Necessary
Every once in a while, it might be a good idea to restart this process from the beginning. Reassess your spending, figure out what your necessary expenses are, and try to maximize your saving. Before you know it, you’ll be a budgeting pro, and you can move onto other financial goals like increasing your credit score.
Whatever your financial life has in store for you, MoneyLion can help!