Part I: Identify all the lazy dollars in your financial life. Identify source, amount and what action might be indicated. Part II. Develop a personal and household savings plan. What savings strategies will you use to improve your financial situation? Explain why you chose each strategy instead of others that you did not choose. How much will you save each month? How much interest will you earn and how much will you have saved in 5 years, 10 years, and 20 years?
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Introduction
lazy dollars in your financial life
Making personal savings plan is a good way of securing one’s financial future. Financial experts argue that one of the reasons why most people do not save is because they do not have personal goals, (Klawitter, Anderson & Gugerty, 2012). The following are the lazy dollars in my financial life;
- Entertainment – charges to night cubs, drinks at the clubs, upscale coffee drinks, concerts
- Food, clothes, jewelry, toiletries and candies
- Vacations/recreations
The total costs for entertainment amounts to 50 dollars, vacations and recreations costs 100 dollars while expenses on food, clothes and candies are 35 dollars. These expenses are incurred on a weekly basis, although not on a regular basis.
Personal and Household Savings Plan
- List of my financial obligations such as rent and utilities
- List of my personal spending categories such as recreation
- Assign the a percentage of the total expenditure to savings and write it as a dollar amount
- Subtract this from the total income and divide the figure on the daily obligations
- Look for budget areas that can be eliminated or reduced
Saving Strategies, I Will Use to Improve my Financial Situation
I will use two saving strategies and these include setting aside 10% of my net income on savings and placing the savings in a bank account. My personal savings plan will give me the approximate amount of income and financial obligations. Using it, I will be able to calculate the net income from which I will set aside 10% to savings. However, some expenses may be unforeseen, and this requires savings in traditional accounts in order to make them easily accessible. I shall choose these savings strategies since they provide a comprehensive mechanism of calculating the actual savings amount to be set aside unlike any other ad hoc method. With these savings strategies, with a monthly gross income of 565 dollars, the net income calculated shall be {(565-[100+35+50]} = $380. Setting aside 10% of these gives $38 dollars that go into my monthly savings account. In the savings account, I shall earn 8% interest rate and this translates to monthly interest of $2.53……………………………………………………………………………………..
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