I love it when a plan comes together and so does Hannibal from the A-Team. I’m sorry to say that not all plans work out and especially money plans. If there is one thing that is guaranteed is that an unexpected expense will always come up.
Luckily, you will learn how to save money with a plan for those unexpected life events. Let me warn you, though, when you begin to budget you will fail. A working budget takes time and effort.
The plan and the budget will not work for the first 30 days. And, that is ok. Even Thomas Edison failed 10,000 times but never gave up. You will see some improvement after 60 days, but it will not really begin to take shape and be effective until after 90 days. I tell you this, so you don’t get discouraged after it fails in the first month.
Find Your Purpose
That’s right, I said it. The first thing we have to do is find our purpose. I will give you a hand with this one. The purpose for our plan is to have money for emergencies, cash purchases, retirement, college, and investing.
- Money for emergencies
This is how we prepare for unexpected events. If you fail in any other part of your plan, make sure you get this one right. This is your foundation that will keep you afloat while you save money. Start with $1,000 dollars. Make sure you read my post on How to save 1000 dollars to do this as fast as possible. When we eliminate our debt, we will build up our emergency reserve to cover six to nine months of our expenses.
- Money for major cash purchases
From here on out we will no longer charge anything to our credit cards, take loans out, or finance any purchases. We will be saving and paying cash for all major purchases. We will avoid financing costs at all costs (pun intended) and negotiate cash discounts.
- Money for Retirement
We will no longer wait until the federal requirement age for retirement. We will retire and live on our own terms as fast as we can. This means will we need to build up our nest egg as fast as possible but not until we have paid off all our debt. We will be saving a minimum of 20% of our gross income in tax-deferred savings plans like 401Ks and IRAs.
- Money for kids’ college
Relying on financial aid and government grants will not be an option. We are going to change our story and our legacy moving forward. We will not allow our kids to become slaves to student loans like we did and have to move back in with us after college. This means we will be preparing for their college education with 529 savings plans.
- Money for Investing
I just said in the last section we will be changing our legacy. Our legacy will begin with us and that includes investing wisely. After our tax deferred plans are maxed out each year we will diversify into other investment vehicles like real estate and index funds.
Now that we have our priorities straight and we found our purpose, how will we ever have enough money to save for our life goals?
- Make a list of all your debt
We are going to face our finances sooner or later and the sooner it is the sooner we can start eliminating our debt. We will begin by listing our debts from the smallest to the largest balances. Do not worry about the interest rates or the minimum monthly payments. You can find simple tool that is FREE to use at www.everydollar.com.
- Pay off the smallest debt
Begin to eliminate your debt by paying as much as you can toward the smallest debt until it is paid completely off. We will continue to make minimum monthly payments on every other credit account during this time. When we pay the smallest balance completely off we will apply the minimum monthly payment we were using for that account and apply it to the next smallest balance until that one is paid off. It is known as the snowball strategy.
You are probably wondering why we do not pay off the highest interest rate account first to save on interest. All the money strategies we will be using are meant to have immediate results. Achieving fast results gets you pumped and keeps you motivated as you see your debt begin to crumble.
- Move on to the next debt
We will continue to pay off our debt by moving to the next smallest account balance until it is all paid off. Every time a debt is eliminated the minimum monthly payments from those accounts that are paid off will be applied towards the next debt. That means you do not use the extra money to buy unnecessary items.
These changes seem drastic but if doing the same thing over and over the last few years got you to where you are today (in debt) we have to make drastic changes. The massive results will make you feel great and get you out of debt so you can grow your savings.
- Dining out
When my wife and I take the kids out to dinner the bill easily comes out to over $55 plus the tip. We used to dine out every weekend which summed up the total to $220 each month. That is not counting groceries. When we cut that to two times each month we immediately saved over $100 dollars each month. If we order pizza on the weekends that we do not go out to a restaurant we still see around $100 in savings.
Every sit down at a movie theatre for us is close to $50 dollars for the tickets and another $40 for snacks. We got really creative with this while still enjoying time with the kids. We began attending the matinee shows that cost about half the price. The kids also began to use their allowance for their individual snacks.
Another thing we started doing that was even more fun and saved us a lot more is we started going to a drive-in instead. The entrance fee is $10 for the vehicle. Imagine that. And, they feature two films usually one for the kids and one for adults. That is amazing! That saves us close to $200 dollars and we can bring in all the snacks we want.
Note: Unfortunately, drive-ins are not very common anymore. We are lucky to have one five minutes from the house. If you are lucky enough to have one close by make sure you have a good battery in your vehicle. The last time we went my battery was three years old and died on us. Luckily there was plenty of helpful people to give us a hand. We were not the only ones, either.
Here is a vehicle maintenance tip for you. Replace your vehicle batteries every two to three years.
I have a saying I saw on a T-shirt once and I hope I don’t offend anyone, “I run on coffee and inappropriate thoughts.” Coffee can be an expensive habit if you run by Starbucks every morning or Dunkin or whatever coffee shop you patronize.
Here is a tip that will save you close to $100 a month and some taste buds. Ready? Grind your own coffee beans. I started grinding my own coffee beans a year ago and I never looked back. You can find a coffee grinder for about $15.00 on Amazon and a 12oz bag of Dunkin Donuts whole bean bag for about $8. That bag will last me two weeks and I run on coffee all day.
Here is another off-subject tip that will enrich your life. The taste of fresh home ground coffee is unbelievable! The ground coffee that you find at the grocery store aisles is often outdated because of logistics and shelf time. Give it a try just once and tell me what you think.
Don’t even get me started on instant coffee. My wife swears by it and if you do too that’s ok, but not only does it taste different it also costs more per ounce.
- Road trips
Who doesn’t love road trips? I bet your wallet doesn’t. Gas station snacks can get expensive. Sometimes the snacks you buy when you stop to pump fuel costs as much as dining out. Try buying snacks at your grocery store before you hit the road. Your bank account will appreciate it.
Do you get your truck washed every week? Ladies, do you like to get your nails done every week or every other week? Try doing these often-overlooked chores yourself and see the difference in your bank account. If you cut your hair every other week, try letting it grow for a month or six weeks. How ever long you decide to take between cuts try extending that time and see how much you can save.
Getting on a plan to save money does not have to costs you or your family fun-time. We just have to get creative. And, often those small adjustments will pay off in fun. My son loves the drive-in and it saves us tons of money. I love my ground coffee and it saves me money. Get creative and see what alternatives turn out to be better options for you and your family.
I hope you found this post helpful and if you have any questions about how to save money with a plan or want to share your experience, leave a comment below.