New Year, New Start
By: Mary Thompson, Capstone Brokerage President, January 25, 2016
Every year, people make resolutions for many different things. Live healthier! Is always a huge trend. After all, Gym memberships sky rocket in January, and salads become the lunch option of choice. Another common resolution is to get finances in order, which can help ease the burden of financial stress. I came across this easy savings plan last year that was so simple, I have to share.
52 Week Savings Plan
Each week, you increase the amount saved by one dollar. So week one save $1 week 1, $2 week 2, all the way to week 52 where you save $52. I personally think it is better for me to go backwards and start with $52 and decrease the amount every week to lesson the burden around the holiday times. If this savings plan is followed, at the end of the year indiduvals would have saved $1,378. That is a pretty nice amount of money. See the 52 Week Savings Plan I have created below.
As far as financial planning is concerned, this would not only be a very easy place to start building your savings account, but also a habit of saving in general. Now you may be wondering what this has to do with insurance. Here is the thing: often times the unexpected happens such as automobile accidents, home repairs, and even health issues.
While your insurance policy will cover most of the burden, most plans will have a deductible. I have had several clients over the years REALLY struggle to pay the deductibles in these situations. Even though they make the monthly payments just fine, it is hard for them to meet the deductible when any of the above incidents occur because it is an unexpected cost. It made me think if I could share this simple savings plan with everyone I know, especially clients, it may lesson the burden when faced with having to make an insurance claim.
Emergency Fund Account
In addition to following this savings plan, it is also beneficial to have a separate account set up as an emergency fund. Every one of us runs into unexpected events that are costly and not insurance related, a major car repair, loss of a job, a need to travel due to family emergencies, etc. To give yourself peace of mind and bit of cushion, set aside a certain amount each month—it could be $50 or $500, depending on your financial situation. I recommend having this amount taken out automatically and transferred to a separate account perhaps even a separate banking institution. This follows my theory if you do not have easy access you won’t spend it.
Taxes
In the next few months everyone is required to file taxes. This is something most dread every year. It is tedious and time consuming. What is worse is if you end up owing the government at the end of the year. Just think if you had saved the prior year by the 52 week plan or if you implemented an emergency fund you will feel less of the burden. Now if you are lucky enough to have paid in more than needed to the IRS and you get a tax return…rather then make a large purchase consider saving the money to fund your emergency fund. Ok, maybe not all of it but perhaps half. I mean splurge a little, but save a little too. Next month I am going to discuss how to start a financial budget and extra ways you can save (you can even save on you auto insurance and homeowners insurance by simply “bundling” coverage). Be sure to follow Capstone Insights for more New Year, New You tips.
