Building a Budget – Building Savings into Your Budget
A good budget gives you the structure and room you need to save money consistently. However, savings need to be built in from the outset. Watch this video to learn how to build savings into your budget so you can reach your goals.
As you’re constructing your budget, one of the best things you can do is build savings into it.
Building savings into your budget allows you to fortify your financial house.
The structure of your budget will be stronger and more likely to stand when an unexpected financial storm arrives.
<ON-SCREEN TEXT: home repairs, job loss, car repairs, health emergencies, lost or stolen valuables>
The best way to build savings into your budget is to treat it like a fixed expense.
It gets built-in along with the other fixed necessary costs at the base of your budget.
First, you measure out the rest of your expenses to see how much room you have to build in savings.
Ideally, you want to allocate at least five to ten percent of your income each month to saving
<ON-SCREEN TEXT: Save 5-10% of your income>
But even if you can’t make that target at first, save what you can.
Even a small amount of savings can stack up over time and can help you develop good habits for how you manage your money.
Once you know the amount you can save, you’re now ready to build that in as a fixed expense.
To properly fortify your house, your savings should be able to support three to six months’ worth of expenses in case a financial storm strikes.
Anytime you add income, make sure to increase the size of your savings.
It’s much easier to construct more space for savings on new income when you haven’t started stacking other expenses on yet.
This will allow you to grow your savings, so your financial house can be as strong as possible.