Saving for a Holiday

“I’m going to NY at the end of the year, just bought my ticket and am now broke. I work a couple of jobs, but have no money. How can I get some savings together to live it up while I’m away?” – Sophie, QLD

There’s a simple truth about saving: you need to earn more or spend less. Ideally, both.

How you go about this is up to you, but always starts with a quick check on where your money’s coming and going now.

To make sure you get everything, carry a pen or phone around and write down everything you spend money on for the next week. Everything. If that’s a mission, only use your bank card for the week and pull the details from there.

Once that’s down, add in a week’s worth of monthly expenses – rent, power, presents, haircuts, phone bills – and you’ll quickly get a picture of how much it costs to be Sophie.

Then, break down how much you earn each week and take your tally of weekly expenses away from this. Right now, this is roughly what you’re saving. If it’s negative, you’re going backwards.

The next step is setting a savings goal to work towards. Want $2,000 to take away? You’ll need to stash $400 a month away from here on in. That’s about $100 a week.

Now you have a target, go back to your weekly budget and find where you can cut costs or pick up work to make up any gap between what you’re saving now and that $100 a week.

Can’t get extra work? Cut more costs. No expense to be spared? Look again.

It might be tough, but it comes back to that simple truth I mentioned earlier: earn more or spend less.

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Image courtesy Stefan Baudy, via Flickr