Almost everyone has some debt they are working towards paying off – and most of the time, that is great. We feel good about getting ourselves out of debt. However, learning methods to avoid debt in the future is essential, and a saving pot can help.
Think about why you ended up in debt in the first place. For some people, it is borrowing money for a car, getting a car fixed, and other things that you’d consider as an emergency.
A small savings pot can be the saving grace that stops you from heading further into debt. But are there other reasons?
How do I know what to save?
The great thing about saving is that it isn’t a one size fits all situation. Instead, your saving journey will be unique to you. You can borrow tips and tricks from elsewhere and personalize them to fit your goals.
Creating the saving pot that you might need, for example:
- House renovations
- Emergency fund
- Travel / Holiday pot
- New car/car repairs
Alternatively, you might want to consider things like short-term and long-term goals. The short-term could be a vacation or fixing the car, while the long-term could be a house deposit.
It is important to remember that you don’t need to add a specific, set amount in there, but it is a good idea to set some goals as to how much you want to save and when.
Christmas
Christmas is an out-of-pocket expense, which means somewhere in December, you take a financial hit – and then spend January and February (and beyond) trying to recover. Instead, you can create a saving pot and add a few dollars weekly or monthly. The idea is that this fund can take a lot of the big hit out of the cost of Christmas.
Determine how much money you usually spend on Christmas, and divide it by the number of weeks or months until the big day. Then, you’ll know how much to set aside in your savings pot throughout the year.
Household
What would you do if your washing machine stopped working right now? What if the crack in the wall was a much bigger issue?
A savings pot is helpful for everything from new door handles to affordable plumbing. A household fund will mean that when repairs and replacements arise, instead of having to use credit cards or wait until the item poses a risk – you can replace it and repair it ASAP.
Fun
When it comes to saving funds, fun is not a dirty word. Most saving experts will tell you to have a saving pot or some free cash for yourself. Even when you are paying off high debts or don’t have much to save – you should be able to live your life happily and enjoy what you have. Create a pot for the things that you like.
Recap: Saving Pot
Saving is a personal endeavor, so take a realistic look at what you can and cannot do – and the reasons behind it. Saving pots create a safety net when things aren’t going swimmingly.
Here are some extra tips for saving: Smart Money Moves: Managing Finances in Your 30s and 40s.
