Creating your savings framework
Date: 17 Dec 2024
Creating your saving framework
A practical framework can turn our good intentions into real savings. The 50-30-20 budget rule is a great tool to form the foundation of structuring our finances.
Setting percentage-based saving targets
The first step divides our income into three main buckets:
- 50% for needs
- 30% for wants, and
- 20% for savings and financial goals
We can adjust these percentages based on our circumstances - some people might prefer 70-20-10 or 80-15-5 splits. Finding a split that works for our unique situation matters most!
Establishing multiple saving catergories
Our saving strategy works better when we create dedicated accounts for specific goals. Saving categories are built around your budgeting needs, but here's a few ideas for what you could include:
- Oh Shit emergency fund (3-6 months of expenses)
- Short-term savings (holidays, special events)
- Long-term goals (home deposit, retirement)
- Medical & Dental expenses
- Takeaways or Uber Eats
- Clothes and Shoes
Multiple savings accounts make tracking progress toward each goal easier! And, remove the juggle guilt! If the money you’ve budgeted is in the account, its for that purpose.
Implementing automated saving systems
Automation stands as the cornerstone of consistent saving. This setup process works well:
- Link savings accounts to our primary account
- Set up automatic transfers after each payday
- Establish alerts for when balances dip below certain thresholds
- Automate bill payments to avoid late fees
This "set and forget" approach will give a consistent path to financial security without conscious decisions each payday. We also retain the flexibility to adjust our saving framework as circumstances change. Regularly reviewing our account structure helps our financial goals stay on track effectively.
Your positive money choices today move you closer to long-term goals - whether building emergency savings, planning for retirement, or growing wealth through investments.
Your success depends on commitment to the financial plan and ability to adapt when needed. Even modest savings started today can build substantial financial security for tomorrow.
