Tuesday, August 11, 2009

How saving for my trip will help me save from now on

Saving for my trip has been the driving force for most of my thrifty, frugal ways but it's important to realize that the habits I'm developing are very important.

Most of what I'm doing will directly translate to what I plan on doing once I'm back.

And since I've got nothing else to write about, i'll delve into my plans. Their simple but sometimes you don't realize the obvious until it's pointed out.

So anyway here's my plan.

When I get back, I plan on maintaining my savings ratio whatever my income happens to be (hopefully it'll be higher :) ).

This is how I'll divide that savings.

20% to emergency fund:
This is something that is extremely useful. Last month my car was hit and I had to pay the deductable on the repairs. I had $2000 in my fund so I could afford the $500 deductable without fearing I'd be out of a place to live or food to eat or a knock on my credit. 20% is a good amount because as I get older and own more things (probably a house) I'll need larger amounts of money to fix or deal with things that would otherwise kill me money wise

20% to the next trip
Right now I'm saving 50 % of my money for the trip. When I get back I'll have more time to save and therefore can save less but still have the same amount in general. This ones obvious. I need a dedicated fund for simply travelling because well, that's a priority for me.

10 % to retirement saving.
Self-explanitory. I want to retire comfortable and lazy. The more I put away, the more I can be lazy and comfortable. But in all seriousness, of all the things you save on RRSPs and other retirement funds are the best because one day you'll be too old to work and you better pray you put enough money or your going to be suffering at a time when you be signing off gracefully.

10 % to toys
Thus will be my fund for more expensive things that would otherwise fill up my credit card. This way, I can buy my expensive camera equipment and still do everything else I want, with cooler camera stuff. A fund like this is a good idea because that kind of purchasing is what people like to spend money on and, if spent wisely tend to be things you actually enjoy the most. At least much more then a thousand useless things you forget about in a day.

10 % to tuition
I plan on slowly continuing to get my Athabasca University degree and so I'll need money to complete courses. Further, if I wan to do things like take flight lessons or art classes or whatever I can. This fund is obvious. I don't need THAT much money in it, but it's a much better investment because it's an investment in myself. Plus something like a degree will help me earn even more money to save or spend. Plus, just because you graduated doesn't mean you should shut down your brain. You should be a life-long learner.

2.5 % to gifts
Thus would be my fund for birthday parties, weddings, anything that comes up that deserves to have more money dedicated to it but shouldn't break the bank. That way you can get what you want to get that person and everyone wins. Also useful when you remember anniversaries on the day of.

2.5 % to charity
This one is two-fold. First I want to help various causes for obvious reasons and I'd like to give more than $2 for say a choclate bar. As a somewhat greedy reason, in Canada you get tax breaks for donating more than $200 to registered charities. So anything that gets me more money back is alrigt with me. In all seriousness, I feel semi-selfish to put so much money for self away and not help others that need it much more and this is a way of giving back.

So this is my plan. It'll come from about 50 % of my income from when
I get back.

And if you think it's crazy you'd surprised how easy it is. As a tip,
consider your savings a bill you have to pay, only it's a bill to
yourself!

Cheers

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