Powerful Money Saving Tips for Your Holistic Financial Plan
Last updated: October 2020
Through the process of holistic financial planning, you can understand your health and wellness as a whole-body experience that is influenced by your money saving habits. Learn to create a money saving plan that helps you to meet your individual wellness goals. In this post, we discuss how to establish an emergency fund, how to develop your emergency fund, and how sinking funds can be helpful in your money saving journey.
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Holistic Financial Planning
If you’re here, you’re likely looking to learn ways to save money in your life. Good for you!
That means you realize that saving money can help you meet long term goals.
Right now, most people currently live paycheck-to-paycheck. When they receive their paycheck for this week, they quickly spend it on rent, utilities, shopping, or other items, then have little to nothing remaining in their bank accounts until the following pay period when they receive their next check. Their spending is short-term focused.
Is this you?
If so, I’m sure you’ve realized by now that living paycheck-to-paycheck is a very stressful way to live! If you’ve forgotten about a recurring expense, say your son’s piano lesson this month, or an unexpected expense arrives, such as a car accident, you don’t have money or don’t have enough money to pay for it.
If you don’t have enough money, you likely are putting this expense on your credit card, or worse – taking out a private loan. While these strategies work in the moment, when you have a credit care or a loan, you still have to pay the minimum payment every month, even if you can’t pay off the entire balance at the moment.
While you might not be able to pay off these unexpected or forgotten expenses right now, you’ve just added another $25 payment to your expenses each month, and removed an extra $12.50 from each of your monthly paychecks (if you get paid bi-weekly). Uh oh!
Maybe you haven’t had any of these unexpected or forgotten expenses yet. Don’t worry, I guarantee that you will. It’s only a matter of time before an emergency arises.
So, what can we do about this? How can you develop a long-term holistic mindset?
The Holistic Financial Plan for Money Saving
This is where the holistic financial plan comes in. Here at Growing Into Eternity, we want to improve our health overall and reach a state of wellness. To do so, you must strive to improve every aspect of wellness – including financial wellness.
Because all areas of wellness are intertwined, when one area improves, the others follow. For example, when you improve your physical health by running every day, you improve your mental health by releasing feel-good endorphins that can help improve your mood.
Think about all the ways your life might improve if you’re able to improve your financial wellness. Maybe you won’t be as anxious at the end of the month when all of your bills are due, and your emotional health will improve. Or, perhaps you might find out you have more money to spend on groceries and can choose to buy organic fruits and vegetables to improve your physical health.
This whole-body wellness is also called holistic: when every part is included in the whole.
You have the power to create your personal financial plan for money saving by considering what your wellness goals are, and changing your spending and saving patterns to meet these goals.
Your Money Saving Goals?
Now that you know you have control over your budget and your money saving habits, let’s consider some of the goals you might have come up with.
If you’re a newbie at money saving, you might want to prepare for those inevitable emergencies in your financial plan. You might want to move from a paycheck-to-paycheck pattern, to one that allows you to pay next month’s bills with this month’s money.
If you’ve started saving money, but don’t have a concrete plan, you might want direction to know what to do with your money when you don’t need it right now. You might be asking questions like, “which account does it go in?” or “What’s the best ways to use my money?”
Take a moment to think about what your individual money saving goals are.
Let’s dig right in!
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Your First Emergency Fund
If you’re a money saving newbie, the first thing you need to do is set up your first emergency fund.
This fund is going to be about $1000 when finished (ask Dave Ramsey why your emergency fund is $1000) and should be in an easy to access account. This shouldn’t go in a retirement or investment fund because you need to be able to access it when the emergency strikes and NOT one month or longer.
Now, you might be asking, “How am I supposed to start money saving for an emergency fund if I’m living paycheck to paycheck?” To which I would say, that is a very good question and one you need to be asking.
Saving money is logically very simple. You either have to decrease your expenses or increase your income.
Personally, I think that reducing expenses is often the easiest way to find money that you can save.
Currently, my husband and I share Netflix and other streaming accounts with other families. This reduces cost, and still allows us to have entertainment. You could even get more radical and cut the cord altogether. I know of one lady who only listens to the radio for media entertainment because she chooses to save that money she would otherwise spend.
Meal planning can help reduce grocery costs by reducing food waste and over-purchasing. Only going to run errands on one day per week can save in gas costs. Lowering your heating or raising your air conditioning temperatures by one to two degrees can help lower your electric or gas bills.
You could also attempt to increase your income, but I find that this one has more barriers to entry – you actually have to go through a hiring process. However, some avenues that can help increase income that have fewer barriers to entry include driving for a meal delivery service, yard work during the summer, or offering cleaning services.
Whatever method you use – decreasing expenses or increasing income – save the extra money and put it in your emergency fund. Even if it’s just a few cents or a few dollars, that money will add up!
When you’re able to have your initial emergency fund of $1000, you can put this money toward those emergencies – the unexpected or forgotten expenses we discussed earlier. Instead of worrying whether you’ve maxed out your credit cards, or how you’re going to afford another monthly payment, you can use your first emergency fund and still meet your family’s needs.
Your Full Emergency Fund
Now, before you continue adding money indefinitely to your $1000 emergency fund, take a moment to consider what your money savings goals are again. If you continue to make monthly payments toward your monthly expenses (i.e. your credit card or other debts), you will never be able to get ahead unless you just all of a sudden make gobs of money. Very unlikely and improbable, but not impossible.
The next step is to pay off all of your debts.
Only after you pay off all of your debt should you grow your emergency fund larger than $1000. In actuality, if you’re in debt, this itself is an emergency situation. So while we want the $1000 for tangible emergencies, we want to address the financial emergency with any leftover monies.
Continue to lower your expenses and increase your income during this time to increase your money saving power and pay off your debt!
Only after you’ve paid off all of your debt should you begin to establish your full and complete emergency fund. When AND ONLY WHEN you are at this stage, begin to save three to six months worth of expenses. By this time, you should have already created and used your budget for money saving. Using this budget, you’ll be able to estimate rather accurately what one month’s worth of expenses is.
When you have your full emergency fund at the money savings goal you would like, you can then move on to bigger and better things.
The Sinking Fund
By the time you’re thinking about sinking funds, you’ve already met your goals of preparing for emergencies and improving your emotional AND financial wellness, you’ve paid off all of your debt and no longer have to pay OTHER people using YOUR money, and you realize the value of saving money before buying things or experiences.
The sinking fund allows you to meet any future goals you might have. At this point, you’re a regular money saver. You’ve learned the best ways to decrease your expenses and increase your income, and you have money that you don’t know what to do with, just sitting around!
Now it’s time to REALLY consider your goals in life. You can think about the future.
The sinking fund allows you to allot money toward a specific line item. Do you want to start up date night again to improve your marriage and your social wellness? Throw that extra five dollars into your date night fund this month! Do you want to go back to school next year to improve your intellectual wellness and increase future financial opportunities? Start saving for your first class!
Be intentional about what you save money for, just as you have been when you’ve created your emergency funds and paid off all of your debt! You set goals before, and you can do it again!
The Next Steps for Money Saving
If you’re familiar with Dave Ramsey at all, you can see that these money saving tips are influenced by his seven financial baby steps. I firmly believe in following Ramsey’s guidance, and have found it effective for my husband and I. We’ve created our emergency fund, paid off all of our school debt, and created sinking funds to allow us to do the things we value, all in the span of two years of marriage. The baby steps truly work if you’re creative enough with your income and money saving.
YOU can do this! You can have financial freedom and wellness.
Saving money is the first step to establishing a financial plan that will help you improve your wellness and meet your personal goals.
What are your wellness goals, and how will you create your financial plan to meet them?
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Disclaimer: Although I am a mental health professional, I am not YOUR mental health professional. The information provided on this website is for educational and informational purposes only and using this website does not establish a counselor-client relationship, or constitute provision of mental health services. I am not responsible for any damages resulting from your use of the content on this site, as the information provided does not substitute for collaboration with a health professional. Please consult with your health professional before making changes to your health regimen.