Tailor Your Savings: Mindful Management for Every Woman
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Questioning common savings rules doesn’t mean you can’t follow them or use them as a framework. It’s more about being mindful of your finances.
When I discuss personal finances for women, I often emphasize that personal finances are just that—personal. Every woman’s financial situation is unique, just like our lives. Therefore, it’s perfectly fine to adjust or even create your own financial rules.
If a common savings rule doesn’t work for your financial situation, it doesn’t mean your finances are lacking.
You’re doing great as long as you take responsibility for your money and manage it wisely, based on your priorities and possibilities.
With that said, I’d like to revisit the 10% savings rule I mentioned last week.
For some, saving 10% of their income feels like a stretch, while for others, it might not seem like enough. And for some, it may be completely unrealistic.
Feel free to create your own version of the savings rule!
If you’re curious about how to save 10% of your income, I’ll share my tips for getting started. To learn how to increase your savings, what to do if you can't save right now, or where to invest any extra money, keep reading!
I’ll break down these questions and provide actionable advice tailored to your unique financial situation. Let’s make saving simpler and more achievable for you!
How can you save 10% of your income?
Saving 10% of your income (net income) can be a solid financial goal. However, it’s not enough to start saving this amount if it doesn’t fit into your budget and leaves you short on other necessary expenses.
To ensure the rule works for you, you’ll need to follow a few key steps.
Here’s how you can make it happen:
Track Your Spending:
Start by tracking all your expenses for a month. This will give you a clear understanding of where your money is going and help you identify areas where you can cut back. Most importantly, it provides a clear picture of your essential expenses—those that can't be missed in your monthly budget and need to be paid before you start saving.Create a Budget:
A budget is your most powerful tool for managing your money. Create a realistic budget based on your tracked spending. Before allocating 10% of your income to savings, ensure you’ve prioritized essentials like housing, food, transportation, and debt payments. After covering your essentials and setting aside your 10% savings, you can then plan for wants and other non-essential expenses.Automate Your Savings:
Set up an automatic transfer from your checking account to your savings account. This ensures that 10% of your income goes into savings before you have a chance to spend it.Reevaluate and Adjust:
Regularly review your budget and spending. As your financial situation changes, such as a new job or a raise, adjust your savings goal accordingly. Remember, personal finances should reflect your unique life circumstances.
As these are the initial steps to integrate the 10% rule into your financial management, you might be wondering: What if you can’t save 10% of your income?
What if I can’t save 10% of my income?
Don’t be discouraged if you can’t save 10% right away. Start with what you can and gradually increase the percentage as you become more comfortable with saving.
Consistency and discipline are key!
As you begin this journey and move forward, use these tips to help you make progress toward saving 10% of your income.
Reduce Unnecessary Spending:
Identify areas where you can cut back without sacrificing your quality of life. This could mean eating out less, choosing cheaper alternatives, or cutting non-essential purchases.Increase Your Income:
Explore ways to boost your income, such as taking on a side job, freelancing, or asking for a raise. The more you earn, the easier it becomes to save 10%.Prioritize High-Interest Debt:
If you have high-interest debt, like an overdraft, focus on paying it off first. The interest you’re paying might outweigh any gains from saving, so tackling debt is essential.Look for Savings on Essentials:
Find ways to save on necessary expenses, like groceries and utilities. Use coupons, carpool, or switch to cheaper alternatives to free up more money for savings.Avoid Lifestyle Inflation:
If you get a raise, resist the urge to immediately increase your spending. Instead, save a portion of that extra income to maintain or increase your savings rate.
While saving 10% of your income can be a great starting point, you may want—or even need—to save more, depending on your future goals.
If you already have a financial plan that outlines your savings and investment objectives, you likely have a clear idea of the amount you need to save to meet those goals.
Combined with the steps above, you can take it a step further by using another guideline to increase your savings.
How To Increase Your Savings Using The 50/30/20 Rule.
One effective way to boost your savings is by following the 50/30/20 rule. I’ve discussed this rule in another post, but here’s a brief overview to remind you. This simple financial guideline suggests:
50% of your income goes to essentials (e.g., rent, groceries, utilities, transportation),
30% to non-essential expenses (e.g., travel, entertainment), and
20% to savings and/or debt payments (e.g., student loans, credit cards, emergency fund).
Allocating 20% of your income to savings can help you meet your savings goals sooner or within your desired timeframe. However, you also have the flexibility to adjust these categories to better align with your personal savings objectives.
The benefit of the 50/30/20 rule is that it encourages you to analyze your spending, helping you make smarter budgeting choices and potentially save more.
It also allows you to prioritize savings in a way that works for you. For example, once you pay off high-interest debt, you can allocate more money toward savings.
The 30% allocated for non-essential expenses means you can still enjoy life while making cuts without feeling deprived.
While this method may not fit everyone perfectly, it provides a helpful framework to start budgeting, tracking your spending, and focusing on saving more.
And what if you meet all these goals and set aside money—whether it’s 10% or more or less? Where should you put that money?
Where to put that extra money?
Great question, and the answer is simple: It depends on the goal you are saving for.
Emergency Fund:
It's essential to have an emergency fund that covers 3 to 6 months' worth of living expenses. This fund should be kept in a high-yield savings account for easy access.Savings for Larger Expenses:
If you’re saving for specific larger expenses, such as a vacation, a new car, or a home purchase, consider a separate savings account that offers better interest rates or investment options depending on your timeline.Retirement:
For retirement savings, consider contributing to tax-advantaged accounts like a 401(k) or an IRA. These accounts offer potential growth and tax benefits that can help you build a secure retirement fund.
On The Blog
As much as I enjoy sharing tips on managing finances, I understand that cutting expenses has its limits.
That’s why I’ve always sought ways to earn more. From my teenage years taking extra jobs to boost my pocket money, I’ve explored various side hustles until I found my passion in blogging.
More women over 40 are embracing side hustles to enhance their income and achieve financial freedom, and I want to empower you to do the same.
In my latest post, I’ll share five lucrative side hustle ideas, each backed by my personal experiences, to help you take control of your financial journey.
Embrace Your Financial Journey: Mindful Money Management Through Questioning Savings Rules
Questioning common savings rules can lead to a more mindful approach to managing your finances. Personal finances are unique to each woman, and it's essential to tailor your savings strategies to fit your individual circumstances.
Whether you choose to follow the 10% rule, adjust it based on your needs, or utilize guidelines like the 50/30/20 rule, the key is to take responsibility for your financial journey.
Ultimately, your financial goals should reflect your values and priorities, allowing you to create a secure future while enjoying the present.
Let’s start this journey together, celebrating our unique financial stories as we work toward financial freedom!
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Download my comprehensive Financial Planner today and take control of your money management.
Whether you follow the 10% rule, the 50/30/20 guideline, or create your own system, my planner simplifies the process and helps you tailor your financial strategy to fit your unique lifestyle.
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