A savings plan has to be big in order to be inspiring. One that represents a significant proportion of your income is probably impossible to achieve – or is it?
This year, my resolution is to try a combination of several extreme savings challenges and strategies, because putting something aside every month has never really worked for me.
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Sticking to a savings plan is difficult
Maintaining an organised financial routine and depositing funds in a savings account or ISA on a regular basis takes a certain kind of discipline. Not only that, it requires sufficient disposable income every month.
Without discipline and surplus cash, it’s easy to assume that a savings plan is going to fail.
No two months are financially the same in our household, and that is probably the same for most people. With unpredictable income and expenses, it takes a lot of effort to keep on track and avoid borrowing more.
There are a number of reasons and excuses that cause savings plans to derail. My excuses are being self-employed and a single parent, yet I know that there are plenty of women in that position who are able to put aside money for the future.
Therefore it must be an attitude of mind, rather than circumstances, that prevents some people from reaching their financial goals.
Why I’m setting an ambitious £3,000 savings target
Saving for the future is rather vague as an incentive. Setting a more specific amount to save can help to inspire the right actions to raise the cash. Perhaps it’s like going on a diet – losing weight for a wedding or other special occasion makes it easier to turn down a slice of pie.
My savings plan for 2022 is to raise enough money to pay for some essential home repairs. Regular savers know that this should be covered by existing savings or an emergency fund!
Extreme savings challenges
Here are a few extreme challenges that could suit your savings plan:
- The 52-week challenge – this involves saving £1 in the first week of January, £2 in the second, £3 in the third, and so on until you have to find £52 in the final week of the year. By the end of the year, you’ll have £1,378.
- The 365-day challenge – save £1 a day to raise £365.00, which could be handy for Christmas 2023.
- The no-spend challenge – stop spending on anything non-essential for a month or more.
I’m going to try all of the above, and other money-saving games, to help to establish a regular savings habit.
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Money management apps
Staying positive is not easy if it involves self-denial. Savings and money management apps can motivate and nudge you towards being a better saver.
Tech may be more efficient than doing calculations on the back of an envelope or adding coins to a jar, but I think these old-fashioned methods are more mindful.
A savings plan is about income
Unfortunately, frugal habits can become addictive and an end in themselves. An abundance mindset is more uplifting, even when you can’t afford it. Money must flow out so that it can flow in.
Income is crucial because it creates the money to save. Having more than one income stream is the only way most of us will ever be able to create a workable savings plan. A passive income stream is ideal. That’s a concept I’m going to explore over the coming months!
Saving pounds as well as pennies
For the spontaneous, saving a set amount of money every week or month, in the same way, is missing a trick. A flexible savings plan may provide a greater chance of success for some of us.
In February and March, we don’t pay council tax – that’s around £300 that can be saved with no extra effort at all. A no-spend week or two staying at home in January seems appealing. In contrast, it’s easier to save cash in the summer on travel and heating costs.
Raising funds has a more active vibe than saving money. Funds can climb steadily, stall, and take huge leaps forward. Raising money shouldn’t have to be about relentless, joyless thrift – even on a low income.
I’ve made a fresh start by creating a budget on MoneyHelper. My target is way over what I’m likely to achieve, but by being optimistic I may just manage to save a little more than usual.
The post My £3,000 extreme savings plan for 2022 appeared first on The Motley Fool UK.
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