4 Reasons to Use a Savings Plan

We agreed that the New Year really started February 1st, right? I know today is like the 18th but heck we’re here!!! Let’s get started! It’s always a goal to save more money in the New Year. My pocketbook (wait what am I a 60 year old woman?!?!) took a hit during the holiday season. I have to kick my savings into high gear each year. Saving is not the easiest thing to do for most of us. It is often helpful to make a commitment to something that forces you to save at least minimum amount each pay period. It is certainly okay to exceed the amount but the goal is to stay on track with the minimum to ensure you have something.

A friend asked me “What will you do once you reach your savings goal?” I replied, “set another goal”.  What is the point of having a savings plan if you have no plan for the funds? Here are 4 reasons to use a savings plan.

1. Self-indulgent Purchase

My guilty obsession is designer handbags, shoes, and belts. It’s a very healthy obsession in that I only secretly own one designer bag, but I’m always so tempted to purchase another. In the past I’ve saved money, but I’m hesitant to spend it. I feel guilty spending a thousand dollars on a handbag or some shoes.

In an effort to take a different approach I’m designating a savings plan specifically for a splurge item. The goal with this approach is to make the purchase as guilt-less as possible, because I have planned for it.

What kind of items do you consider a splurge for you? The value of experiences has increased tremendously, so perhaps that is something you can splurge on with a savings plan.

2. Rainy Day Fund

The standard rainy fund is about 3 to 6 months worth of expenses. My standard has always been 3 months; however, being a new home owner  has driven me to save much more because the risk of loss is greater. For this particular savings I use a larger bottom line plan as a baseline to ensure that I’m saving something.

Life can sometimes throw us all types of curve balls; therefore, it is important to be as prepared as possible. My rainy day fund provides a sense of security and a piece of mind.

When determining how much your rainy day fund will contain do what makes you most comfortable.

3. Travel Fund

The number one reason people say they don’t travel is due to finances. Experiences are far more valuable than anything and the most amazing experiences come from traveling. If you struggle with finding funds for travel then you should definitely consider designating a savings plan for travel.

After purchasing my home (are  you tired of hearing about my new home yet? LOL) my goal was to put more money towards traveling so I started a savings plan for travel in 2021. Yes, you read that correctly I said twenty twenty-one! As you can see at this point I have several savings plans congruently, which means I don’t have much more to spread around. There are lot of cool places in the United States that I have on my list so for 2020 I’m traveling domestically.

International travel, however, will have to come in 2021 hence the savings plan for travel. All travel doesn’t have to be via airplane, road-trips are a cost effective and tons of fun. If you plan it correctly you could check several destinations off your list on one trip.

4. Holiday Shopping/Gifts

As stated above the holiday season always hits my pockets hard. While I have not been successful in completing a savings plan for Black Friday and Holiday shopping it is one of the best reasons to use a savings plan. The size of your shopping list will determine the type of savings plan you need for this.

This savings plan will make the end of the year go smoothly with regards to finances and your New Year savings plan will not have to be as aggressive in the beginning. With all the deals during this time of year you will certainly be able to maximize which ever plan you choose.

Also during the year I’m always going to baby showers, weddings, and birthdays, so having a savings plan designated for gifts keeps my budget in tact when the invites come rolling in.