How to Create a Savings Plan to Help You Stay Out of Debt

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How to Create a Savings Plan and Reach Your Financial Goals

Do you want to have money in the bank so that when the bills come in, you can pay them straight away, with cash and without stress?

Do you have a specific savings goal that you want to achieve, like go on a holiday or save for a house deposit?

What you need is a savings plan. 

Below I’ll outline a savings plan we’ve been using for many years now. It’s simple but highly effective. 

The 4 Steps to Creating A Savings Plan

The whole point of creating a savings plan is to stay out of debt and reduce the pain of paying large bills when they crop up. 

Putting aside a few dollars each week is a whole load easier than having to suddenly come up with several hundred dollars when a bill falls due.

So let’s get started.

1. What are You Saving For?

Before you can create a savings plan, you need to know what you want to save for and how much you need to save.

Start off by writing a list of what you want to save for. Here’s an example list to give you a few ideas.

create a savings plan

Don’t get overwhelmed by the long list – you don’t need to save for everything at once. Think of it as a work in progress. Start with the most important things you need to save for first.

2. How Much do You Need to Save

Next, write down how much you need to save for each item. How much is your electricity bill usually? How much do you need to save for your holiday? 

Then put a due date for when you need to save that amount by.

You’ve just made a SMART goal. Your goal is SPECIFIC (you’re saving for a holiday), it’s also MEASURABLE (you can see how far you’ve come by looking in the bank and TIMELY (you know exactly when you’re going to reach your goal. 

Is it attainable and realistic? Let’s look and see.

Savings Plan Example Part 1

3. Work out How Much You Need to Save Each Payday

In the example, the goal is to save a total of $5,600. There are different time frames for each goal, but that’s ok, we’ll work it out so we can reach each goal in the desired timeframe.

The next step is to calculate how many paydays you get between now and your goals. So if you get paid fortnightly and your goal is 12 months, you’ve got 26 pays to save.

Do this for all your savings goals and add up the total. That’s how much you need to save each payday to reach each goal. In the example below, the total amount to save each fortnightly pay is $287.18.

Savings Plan Example Part 2

Are your savings targets attainable? Are they realistic? Can you afford to put aside that much each and every payday? 

To work that out, you need to fit your savings plan into your broader budget that includes everyday expenses and debt repayments. 

I like to track our savings goals using excel (you can see how I do it here), but this isn’t necessary. Once you’ve calculated and automated the savings plan, you can rest assured knowing your savings are on track. Just remember to update your plan once you’ve reached a goal.

4. Automate Your Savings Plan

Now that you know how much you need to save as part of your savings plan, use online banking to schedule your savings to come out each payday. That way, you don’t have to worry about saving money, it happens automatically. As long as you don’t dip into your savings, you’re guaranteed to reach your goal while you get on with living. 

What if You Can’t Afford to Save as Much as You want?

If you can’t save as much as you would like to, remember, any savings are better than no savings at all. Save as much as you can.

You may need to adjust your goal or change the time frame to give yourself longer to save for it.

Or you can use these tips to boost your savings in order to reach your savings goals sooner.

In some instances, we only put aside $2 for certain savings goals. For instance, we don’t have private health cover, so I put aside $2 a pay to cover possible teenage braces etc. in the future. It’s basically self-insurance.

The thing to remember is, over time, that $2 adds up and when you need to use it, you’ll be glad that you put money aside.

Creating a savings plan is a stress-free way to manage your money. You can rest easy knowing you have the cash to pay for future expenses. How good is a holiday if you can come home to no debt!

create a savings plan


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    1. LOL, I think I’m really unorganised – that’s why I need to write everything down and automate it.

  1. So do you have bank accounts for each one or just the ones typed in a bold font? I do my budgeting similar except I prefer to transfer it myself instead of having it done automatically. Probably because I’m not as disciplined as you and I like to be able to change the amounts if I want to. But I also enjoy the process of sitting down each fortnight and manually putting the money in, it gives me time to reflect on the increasing dollar signs and pat myself on the back for not being tempted. It also makes me realise when I was tempted how much I COULD have gained if I had stayed the course. My envelopes/accounts are a bit more general like “Car Stuff” “Holiday Stuff” “Household Items” “Everyday Bills” I used to have one titled “Big Bill Lump Sum” Which was a debt I was having certain amounts automatically deducted plus I would put aside a certain amount each fortnight to then apply as a lump sum payment when it added up. I had negotiated with them and they agreed that each time I paid off a certain amount in a lump sum they would drop the interest rate. I am now completely debt free and i bought a car recently, which was separate from the debt. I highly reccomend talking to you bank as it can’t hurt to ask. What’s the worst that could happen…? They so “No”, then you’re not any better off, but you’re not any worse off either.
    Reading your blog has helped keep me motivated. So keep up the good work, and thanks for helping me stay focused on my goals, and achieving being “in the black”.

    1. I used to do it automatically, then for the last couple of years did it manually myself for the same reasons. BUT, I’ve gone back to automating it and I find we save lots more because I now ‘can’t’ change the amount if I want, which is what I was doing when I did it manually (well, I can, but I haven’t yet). LOL, like I said above, I think the problem is that I’m not disciplined! This means I don’t need to try to be. But I still get the satisfaction of adding to our excel budget.

      I use one account for the lot and break it down in excel. My bank doesn’t offer multiple free accounts ??? I should check that out, maybe they do now.

      Congratulations on being debt free! That’s a great idea re the interest rate. I agree, it doesn’t hurt to ask.

  2. I do this but it broader strokes. I put away $200 per week (as I get paid weekly) for my bills – strata, electricity & gas, water, council rates – and any other bills I might struggle to pay from my usual weekly allowance (like the electrician coming). I also put money away to refinance my mortgage at the end of the year (which in the mean time is and would be my emergency fund). Another (free) account saving to do my ’12 in 2′ list – 12 bucket list style things I want to get done in the next 2 years. I then, as a legacy before I had a bills account, save $20 per week for my annual lump sum payment of health insurance. Anything additional can help cover medical expenses that I might struggle with in my weekly allowance. I love knowing I have money set aside for bills, it means I never feel ‘poor’ one week due to bills (I just feel poor for other silly choices, like eating out too much usually!). Thankfully I have no kids, but one day I will, and then I’ll have so much MORE to budget and plan for!