Our plan for a money plan

After about 5 months of working full-time, I’ve become really concerned about our spending, and I’ve been doing research for advice to help us find a solution to our situation. The weekend that passed my husband and I went through old receipts and realised that we’ve been doing some really reckless spending and we haven’t been saving nearly as much as we should be. We’ve noticed a pattern in our spending habits and we now see where all our money has been disappearing to. I’ve combined the bits and bobs of advice and I think we’ve come up with a strategy that fits our lifestyle, and gives us the opportunity to start saving for the future. This is our 6 point plan, lets hope we stick to it:

#1 Create a budget

I think one of our money mistakes has been that we kept using the debit card to pay for everything instead of using cash in hand. Using the card gives a very bad illusion as to how much money you’re spending once you hand over the card to the sales person. We then decided that we will be drawing up a monthly budget for groceries, petrol and entertainment. The budget will change depending on the necessities for the month or if there are any special events that will require some extra money. It will also curb unnecessary spending and will help us plan our shopping around in-store specials. I found this really helpful template over at Finance Girl to get the ball rolling.

#2 Emergency fund

I’ve been doing a lot of research on finances for young couples and I’ve seen that the most popular piece of advice out there (for anyone really) is to start an emergency fund. The idea is to save money to the total of 4 – 6 months of your current salary to keep for a rainy day. This money will only be used in the case of a real emergency or should one or both partners no longer have a steady flow of income, and should this happen for whatever reason, there will be money to compensate for the loss.

#3 Short term savings plan

We are still figuring out our “5 year plan”, like every other twenty something out there, but even though the plan isn’t clear to us, what is clear is that we need to start saving. Now for someone who knows very little about financial planning and savings, it can be freaking overwhelming to figure it all out. But a few years ago when I was interning, I wanted to save some money for when I headed back to campus. I ended up talking to a consultant at the bank to help me, and the advice I took away from that day was to put 3/4 of the money you plan on saving, into a short term bank account. We want to continue with that strategy, but we’re still scouting the best account for us to use for short term savings.

#4 Long term savings PLAN

Like I mentioned in the previous point, the financial consultant advised me that I should put 3/4 of my money into a short term savings account. The 1/4 that was left over I placed into a long term account; which is exactly what we will be doing now. The long term savings plan will be over the period of 5 – 10 years.

#5 A retirement plan

So I know we’re still young and wild and free, but I have read that it is crucuial to start saving as early as possible if you want to have a comfortable amount stashed away for that inevitable day of retirement. We are planning to open a shariah approved retirement policy through either Oasis or Al Baraka bank.

#6 A savings jar

This is a really cool idea that I found on Our Freaking Budget. The plan is to save your money in a jar, and this way you will be able to see your money grow and become inspired to save more and be motivated to continue saving. You add money into the jar on a weekly bases; where the first week you put R1 into the jar, the second week you add R2 and you continue this way for the whole year. This is a great way to save towards a holiday at the end of the year as long as you’re not tempted to use it if you run dry half way through the month.

This plan has really motivated us to become more money conscious and to think about solutions to our financial situation. It has also motivated us for the future and made us realise how important it is to think long term. It is so easy to get caught up in the moment and not care about the next day. But in order for us to reach the goals we’ve set for ourselves and for us to be more stable financially, we have to stick to a plan.

I am looking forward to keeping you guys updated. If you have any more advice or tips feel free to leave a comment. You could also let me know how you are currently saving and budgeting and how it has worked for you.

Happy saving!

– Nihaad