How to Make a Monthly Savings Plan: 4 simple steps

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monthly savings plan

Look, I’m sure if you have been struggling with your finances that you’ve researched or Googled “how to save” or “monthly savings plan”. It can be overwhelming and downright confusing with so much information out there. Who do you trust? What information and strategy are going to give me the results I not only want but desperately need? If you’ve been hanging around for a while, you’ll know by now that my business goal is to help others conquer their finances and live the life that they want.

So, why should you listen to me? My want and need to help others with money stems from needing this same help in what feels now, like a previous life. For the longest time, I could. not. save. money. I didn’t know even where to start and felt that maybe it wasn’t on the cards for me to be financially stable. What nonsense that was. But, at the time I was starting to get hopeless.

Through experience (the good, the bad, and the ugly) I figured out what works. I want to spread this knowledge to as many people as possible. So, I’m going to break down for you exactly how to create an easy monthly savings plan in just four steps. I promise you it will not require of you your blood sweat and tears. However, please do remember that it is up to you and only you to create a different path for yourself and yes it can start with 4 simple steps.

Monthly Savings Plan Step # 1: Establish Where Your Money is Going

monthly savings plan cheap

The biggest mistake people make when they think about creating a monthly savings plan is not realizing where they are currently spending their money. It can be really surprising when you break it down. Those sneaky expenses can trip you up. You will never be able to have that great feeling of “being ahead” if you do not understand what money needs you have and, thus, what you should be saving for.

So, you need to get a good picture of where all your money has been going. It’s ideal to do it for at least the last three months. If you use budgeting software (I use Simplifi) or if your bank/credit union has some budgeting features this could be pretty simple. If you’re more of a paper bank statement kind of gal then you may have a little more elbow grease work to get through this one.

It’s not complicated but it does involve breaking down what you spent into categories. So for every transaction, you’ll want to be able to give it a category so that you can see what categories you need in your budget. Don’t get too uptight about this though or you’ll end up with too much detail and it’s hard to track.

Here are the main categories I use for spending:

  • Groceries (this includes all household items too)
  • Gas
  • Dog supplies/food/grooming
  • Dining out
  • Entertainment (like movies, and activities)
  • Fun money (all the other little crap I buy)

The rest is categorized for bills:

  • Mortgage
  • Power
  • Insurance
  • Medical

Remember to keep it simple but detailed enough that you can sort of know the difference between what you spend at the grocery store versus your Starbucks runs.

The goal of this step is to see what little items you should be budgeting for but aren’t. This way you can start saving for those little expenses in advance and not having to scramble at the last minute to come up with funds all the time. This is what is going to get you “ahead” in your finances. The goal of your monthly savings plan is to have money for what you need before you need it.

Note here that I am not asking you to remove those little luxuries in your life. You do not have to remove your favorite coffee that you so much enjoy. It is about being aware of what you’re really spending. 

Monthly Savings Plan Step #2 Create a Plan Based on Actual Spending

monthly savings plan spending

Once you know what you are spending in each category then you can start setting your goals. It is a good time now to decide if you feel good about how you’re spending that money. Just like our favorite coffee, you can decide that the $100 you spend on books each month is a great investment and one that brings you so much happiness. The fabulous thing is that YOU get to decide.

If you are making any adjustments here, make sure that the numbers aren’t more than 2-5% different from where you are now. For example, if you decide you want to cut spending in half, do so incrementally and not all at once. I promise you’ll have a far higher chance of being successful this way. 

What I don’t want you to do is look at the amounts you are spending and decide to drastically change anything just yet. It’s tempting to see how much you’re spending in one category and decide to eliminate it. However, that’s a little like going on a crash diet, right? Those don’t always work out so well. Don’t do that to yourself.

The fact is that you spend money on things because it helps you avoid pain or provides pleasure so in some way so chopping that off at the source is not likely to bring you a lot of joy. Don’t let limiting beliefs around spending trip you up here your monthly savings plan should exist to help create a life that is fun and enjoyable!

Monthly Savings Plan Step #3 Set Annual Amounts and Break it Down

monthly savings plan steps

I want to talk about expenses that are not exactly equal each month such as gifts, school fees, registrations, subscriptions, etc. I like to create my monthly savings plan categories for annual amounts and then break them down into monthly chunks.

Just think about how much you need annually and divide by 12. If that amount seems too big you’ll either need to cut down that category or some other category to cover it. This helps you see how it all adds up.

When you learn how to create an easy monthly savings plan that accounts for all these little things each month it won’t feel so burdensome when the expenses are due. I don’t know about you but the winter holidays sneak up on me and it feels a whole lot better to put aside a little bit each month. That way, come November, I have all the money I need already there. That’s the feeling you are shooting for and I cannot express enough what an amazing feeling it is. You’ll be so proud of yourself which will only spur you on to continue. 

Monthly Savings Plan Step #4 Now Automate 

monthly savings plan automated

I’ve said it before and I’ll say it again, automation is your friend. If you don’t see the money, you won’t spend the money. Once you know what your monthly savings amounts are, I highly recommend setting up your auto-deposit or an automatic transfer to send that money to savings before it hits your checking account.

If you do direct deposit through your employer you can choose to send a set amount of money to your savings and the rest to your checking each payday. For example, if you get paid every other week that’s 26 pay periods a year. If your annual savings goal is $3000 for all your categories you would divide the $3000 by 26 and that is how much you would auto-transfer every paycheck: 

3,0000 / 26 = $115.38 per paycheck

The rest of your paycheck would go into your checking account to be used for bills and other expenses NOT covered in your savings goals. If you don’t have direct deposit you can also set up an automatic transfer through your bank or credit union and just use the same formula. Set it to occur every payday for the set amount you need to save and that money will then “move” on its own into your savings.

I actually split these up for our total number of paychecks so that amount of the transfer is even lower each week but it works out the same in the end.

monthly savings plan works

Get to work!

Something I preach quite a lot is the power of making small and consistent changes. Impatience isn’t going to get you anywhere quicker. When I was in dire straits, I wanted the change right away. I wanted so badly to get out of the financial situation I was in, I thought drastic measures were the only way I could see that happen. We are making life-long decisions and changes here. It requires a slow and steady approach. But most of all it requires self-compassion and grace. 

I have loads more great tips and tricks on my blog. Check it out here. Are you looking for more hands-on support? Enroll now in the Bulletproof for Life Program and learn now only quick tips but mindset and complete financial management strategy as well.

I’m Sarah


On a mission to change the world of finance from stuffy suits and guilt-trips to a place of understanding supported by solid strategy; I have personally journeyed from homeless teen mom to ass-kicking CEO and now my work centers around empowering women like you to do the same.

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