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Family Savings Plan

Updated on April 30, 2012

Mark C Middleton

Mark C Middleton
Mark C Middleton
Personal Success and the Bottom Line
Personal Success and the Bottom Line

Family Savings Plan

I have a saying, "Doing Nothing is a choice. Doing Something is a responsibility."

Most households do not have a sufficient amount of savings. The following are some time tested, well publicized, conceptually simple guidelines for savings.

  1. Live below your means.
  2. Save 5-10% of your income.
  3. Establish available funds for a minimum of 6 months household living expenses. Preferably, 12 months.
  4. Contribute to all available retirement plans, 401K, SEP, IRA's, etc.
  5. Create a household budget and actually follow it.
  6. Blah, blah, blah.

These are all simple in concept, yet apparently difficult in reality. There is no magic bullet, short of winning the lottery, inheritance from wealthy family or pure dumb luck. So far, I have not won the lottery, my father was a retired Methodist Minister (no family fortune there), and whatever luck I have had has not been profitable.

A study found that it requires an action being repeated an average of 20 times to establish or break a habit. Here are some contemporary savings plans based on real life experiences that actually do work.

Whenever and wherever you have savings, actually put it into a savings account. Otherwise, you don't have savings but rather have simply reallocated your spending. So when you save with store 'Buy one get one' sales, or use coupons, receive rebates on purchases, etc. save it.

If you reduce your coffee, latte, tea, soda, bottled water, cigarette's, drink on the way home from work, take that savings and save it.

I think it was Money Magazine that took some families and challenged them to see how much they could reduce their household discretionary monthly expenditures. The average household reduced their discretionary spending by 65%.

Saving $100 per month for 20 years (a little over $3 a day, less than an average latte) at only 5% will amount to about $41,000.

As an example, a couples savings plan for their granddaughter is to put their pocket change each day into a large jar. Once a year they would empty the jar and deposit the amount into an on-line brokerage custodial account. This averages about $550 a year (about $1.50 a day). They expect that on her 18th birthday to hand her that account with about $17,000.

Start establishing your new habits sooner than later because later will come sooner than you think.

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