A lot can happen in a year. (Don’t believe us? Go check out your Timehop.)
While many of the changes we see as we make our way around the sun aren’t exactly planned for, it is possible to create and implement long-term savings strategies in order to achieve specific financial objectives. A one-year savings plan that can give earners the opportunity to save for substantial goals that may seem overwhelming at first.
Which is to say, yes: a year from today, you could be richer than you are now, or potentially have a better cash cushion. If you play your cards right, you might be on your way toward funding that dream vacation or finally replacing your kitchen counters.
Of course, creating a plan that will actually work does involve some upfront effort which is exactly what we’re here to help with.
Decide What are You Saving For
Before you even glance at your budget, it’s important to get clear about exactly what you’re saving for. Creating a specific objective can give you the information you need to create a solid plan to make it happen—it might also help motivate you to stick to that plan once you’ve made it.
For a one-year saving plan, consider factors like your income and current cost of living to settle on something that will likely be achievable in just a year. For instance, maybe this year you want to stash cash for one of the following:
• A vacation you’ve been dreaming of for years (pending pandemic complications, of course).
• A down payment for a new car.
• A down payment (or significant portion thereof) for a new home.
• Long-awaited home improvements.
• Putting extra money away for retirement.
You may be familiar with the idea of SMART goals—that objectives are most easily met when they’re Specific, Measurable, Achievable, Relevant and Time-bound.
In the world of one-year savings plans, that means coming up with a specific dollar figure for your goal and making sure it’s relevant enough to your life to keep you motivated.
You probably also want to consult your earnings and expenses to ensure that it’s a realistic goal; it’s going to be a lot harder to save up $5,000 if you’re making $30,000 than it is if you’re making $60,000. (We’ll dive further into budgeting and cuts in just a second.) Divide your total goal by 12 to see how much it would require you to set aside each month, which will give you better insight as to how achievable it really is.
Once you’ve got your goal worked out, write it down and post it in a prominent place in your home, like on your refrigerator. Studies have shown that you’re more likely to reach your goals if you take this simple action—so it’s worth picking up your pen!
How To Create a One-Year Saving Plan You’ll Stick To
Now that you’ve got a goal in mind, you still need to figure out how to turn it into a reality.
Here are some ideas on how you could do it..
Start with Your Existing Budget
You can’t make any big changes to your finances if you don’t know what they look like in the first place. And that means the first step toward revamping your budget is to take a closer look at how it looks right now.
If you don’t have a budget yet, take a month to track exactly where all your money is going. Be sure to include both regular, fixed expenses, like rent and insurance, as well as more flexible, discretionary spending like food and transportation. Be brutally honest—tracking every cent will give you the best chance at figuring out how to spend less.
Which leads us to our next step…
Get Creative with Budget Cuts
There are really only two ways to save money: make more of it, or spend less of it. And while asking for a raise or starting up a side-hustle might be smart moves, you only have so much leeway with your boss and time in your day. In other words, you likely have more control of how much you spend than how much you earn.
Since this is an elevated, short-term savings goal, you might be able to make more substantial cuts than you would if you were planning on implementing this savings strategy for the rest of your life. There are simple ways to cut down monthly expenses. For instance, could living without cable at home for a year be feasible? What about cutting off all your streaming services or quitting dining out or drinking?
Even without these extreme measures, you can likely find wiggle room in your discretionary spending. For example, a young couple might spend as little as $405 per month on groceries or as much as $805, according to the latest numbers from the USDA .
How can you dial down your own living expenses? You might quit buying overpriced, pre-packaged convenience foods or find ways to get creative with ramen. Maybe you can start doing your own oil changes rather than taking the car in for service. Think of this as an opportunity to learn some new life skills while also stashing some extra cash!
Regardless of how you get there, your goal is to be able to set aside the monthly amount you’ll need to meet the one-year savings goal you wrote down and pinned to your bulletin board. So get out your calculator, and don’t be afraid to get creative.
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Make a Plan for Your Investments
No matter how much money you save, it won’t go as far as it could if you just stash it under your mattress. Figuring out where to put your savings is an important step in your planning.
Different kinds of savings accounts are used to help individuals save for different goals. For example, a long-term goal like retirement may be best suited for an investment vehicle like a Roth IRA, which offers some tax advantages. But for shorter term goals like starting an emergency fund, an account that offers more flexibility and has less restrictions, like a high yield savings account, may be a better option.
Keep it Simple
Having a plan is one thing. Sticking to it is another. But if you keep a simple savings plan, you’ll stand a much better chance of actually making it work.
For instance, setting up automatic transfers that will shunt a portion of each paycheck into your savings account makes saving seamless—and ensures you don’t get stuck in that all-too-familiar situation at the end of the month where you accidentally spent what you intended to set aside.
And building in systemic cuts that you don’t have to think about (like ditching that monthly subscription box, for example) is a lot easier than poring over the coupon book every Sunday.
Set It, Don’t Forget It
Like any money goal, your one-year savings plan is going to take some grit to get to. But having the right tools at your disposal does make the process a whole lot less painful.
SoFi Checking and Savings® offers you an easy birds’-eye view of your finances, and its Vaults feature allows you to set aside savings for specific goals and purposes.
Best of all, there are no account fees, and you’ll earn rewards when you spend and save.
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