Save Today to Build Tomorrow's Future

Although a lot of your household expenses will remain constant from month-to-month, such as your mortgage, car payment, and insurance premiums, some of these monthly expenses can and will fluctuate throughout the year. 

The best example of this would be the cost of heating your home. Obviously, we spend far less on heating expenses in June than we do in December. 

This is also usually true for electric expenses, especially if this is how you heat your home. Once again, the best way to get an accurate number of this line item is to look at your past bills, which are available on the utility company's website. 

Granted, you'll never be able to estimate your heating expense with 100% accuracy, but you should be able to get it close.

The biggest problem with estimating an expense like heating is the fact that you still have set a budget allocation for this unknown expense. Thankfully, many companies understand this and have instituted monthly billing programs that estimate your total annual usage and allow you to pay this estimated amount monthly. 

So, even if your gas bill is $40 per month in July, but jumps up to $300 in February, you'll still be able to budget, accurately, for this expense. 

Put it all together

Add up all your income sources and then add up all your expenses. This will give you a promising idea of where you stand. 

Do you have a lot of extra money at the end of the month or is your budget tight? 

For most of us, the latter is true, and if that's true for you too, then it's time to take a close look at your expenses. You'll want to determine which items on your budget are essential expenses, such as your rent/mortgage, condominium fees, utility bills, insurance, car payments, and pay those first. 

Next, determine which of your expenses are "extras" or "comfort items". 

If your budget is too tight, you're going to need to make a choice. Using our example above, is it necessary that you buy a large coffee every day, or can you sacrifice the extra few minutes every morning and just make it yourself. 

This is true for every item on your budget that is considered "non-essential". Figure out what's most important to you and figure out a way to make your budget work for you. 

Save, save, save!

The most important thing, aside from bills, that you should factor into your budget is the portion of your salary that you will be putting into savings. If you're not saving a portion of your salary already and you think you might have a tough time at first, we suggest starting out putting a small portion of your salary into a savings account and getting used to living on what remains. 

Start with 1% and slowly increase the amount you save until you have at least 10% of your paychecks going into a savings account for short-term savings.

Why is it so important to save? 

Well, for one thing, you're saving for three reasons. 

It is important to have funds for short-term savings (the 10% we suggested just a moment ago), long-term savings, and for retirement. 

Short-term savings takes care of things such as emergencies, unexpected household repairs, and spontaneous events that may come up. 

Long-term savings cover things such as vacations, tuition for your children, and future home purchases. 

Retirement planning is the most important portion of your savings. 

It is your nest egg for after you stop working and determines how long you will be able to live comfortably. 

What percentage of your yearly income should you be saving for retirement? 

Most people do not know the answer to this, which is one reason many of us do not save the proper amount. Realistically, you should expect your living expenses to be about 70% of what you are currently paying. 

Sure, you may not have had a mortgage in your golden years, but you may have a lot more medical expense. The typical age for retirement is 65 years of age. 

The typical life expectancy for Americans today is between 75 and 80 years of age. 

That leaves a minimum of 10 years of your life, during which you're not working, so that you need to have an adequate amount of money to support yourself and your spouse. 

We always recommend speaking with a retirement planner to determine how much you should be saving for retirement. 

Remember, it's never too late to start planning for retirement. Granted, the later you start, the harder you'll have to work, but it's vital that you speak to a professional, develop a plan, and get to it!