"I choose the likely man in preference to the rich man; I want a man without money rather than money without a man." - Themistocles

SavingAdvice.com Blog

Bridging the gap between saving money and investing

Money Challenges

The Weekend Wrap: Financial Education, Student Loans, Recovery, Jobs, and a Crypto IPO

By Leave a Comment

The Weekend Wrap

With all the emphasis on stimulus checks, you might have missed some of the personal financial changes in the American Recover Plan. You might also want to know where the job market is heading; what is planned for student loan debt; the push for financial education; and a first in an IPO.

Efforts to Require Financial Education Rising

You can see Americans at international sporting events and political gatherings shouting: “U.S.A, U.S.A.” and “We’re number one!” However, you don’t see proud parents and grandparents outside schools chanting, “We’re number 14!”

America’s Financial Literacy Declining 

Fourteen is significant because that is where the nation ranks globally in financial literacy. In fact, only 57 percent of Americans are financially literate, according to a Standard & Poor’s Survey. 

American’s lack of financial knowledge has spurred an increasing number of states to mandate financial education in schools. Today, 21 states require personal finance to be taught in high school. That is an increase of four states since 2018. Florida dropped its financial education requirement but retained a personal finance elective.

To make matters worse, financial literacy is declining. Only 34 percent of Americans correctly answered four out of five personal finance questions in a 2018 Financial Industry Regulatory Authority (FINRA) survey. That is down eight percent from 2009.

Economic Divide

Students from low-income families suffer the most. The Council for Economic Education is a non-profit that promotes financial education. It found that in states without mandatory financial education, poor students had much less access to financial information than wealthier students.

Research from a University of Montana study indicates students who have had financial education in high school make better financial decisions. That research shows those students incur less educational and personal debt.

Student Loan Forgiveness

Up next, we are going to look at some of the lesser-known elements of the relief plan enacted last month. But first, let’s take a look at provisions for something that was left out of the law.

Student loan forgiveness was not included in the American Rescue Plan. However, section 9675 of the law makes student loan forgiveness tax-free from 2021 to 2025.

That is great, you say. But if my student loan can not be forgiven, what’s the big deal?

The big deal is this. Making student loan forgiveness tax-free is the first step to obtaining loan forgiveness. It is the horse that must come before the cart. Now that it is in place, what’s next?

Sunday’s edition of Saving Advice will examine the latest in the push for Student Loan Forgiveness.

More Than a Stimulus Check

Everyone knows that the American Rescue Plan Act signed into law by President Joe Biden last month gave most Americans a stimulus check. But you may not know some of the other aid it offers. Here is a brief rundown.

Child Tax Credit Increase

The main takeaway here is that this tax credit has been increased from $2,000 to $3,600 for each child under six and to $3,000 for each child between six and 18. The benefit is available for couples making under $150,000 a year or single parents making under $112,500.

Another significant change is that the child tax credit will be sent directly to families on a monthly basis. Previously, parents had to wait until their tax refund came through to get the money.

“This change will allow struggling families to receive financial assistance now,” according to the treasury department, “rather than waiting until the 2022 tax filing season to receive the Child Tax Credit benefit.” 

Schools and Childcare Block Grants

The law designates $130 billion to reduce class sizes, improve ventilation, purchase personal protection equipment, and other measures to help schools K-12 open safely. Another $40 billion is set aside for childcare providers and $1 billion for Head Start.

College students will have access to $40 billion in emergency financial aid.

Homeowners and Renters

The moratorium on evictions and foreclosure ended March 31. The law does not extend that ban. However, it does provide funds to help you keep a roof over your head and keep the lights on.

The law provides $10 billion in aid to homeowners and another $21.6 billion for renters.

You can access funds through your state, territory, or tribal government to make delinquent mortgage payments. State, territorial and local governments will also handle the money targeted for rent and utility payments. 

Unemployment and COBRA

Unemployment benefits of $300 a month will be paid through Sept. 6, 2021. That is $100 less than originally proposed. However, a surprise tax benefit makes the $300 plan more advantageous.

The first $10,200 in unemployment is paid tax-free. In addition, if you paid taxes on unemployment benefits in 2020 you will be able to recover those funds when you file your 2020 tax return. 

COBRA gets a full subsidy. That allows you to stay on your employer’s health plan through the end of September.

Food Aid

The Supplemental Nutrition Assistance Program (SNAP) gets an increase through Sept. 30. Just over $2 billion will go toward nutrition assistance. Another $490 million will go to increase cash vouchers in the Women, Infants, and Children (WIC) program.

Aid for Businesses

Businesses get $7.25 billion to cover payroll and other expenses as part of a boost in the Payroll Protection Plan (PPP). One change is that non-profits are now included in PPP.

Restaurants and bars get extra help. $25 billion is provided to cover payroll, utilities, rents, and other operating expenses.

Public Health and Safety

You may not see it in your personal finances. But state and local governments have incurred more expenses as a result of the pandemic. They have also lost tax revenue.

To help, the law allocates $350 billion dollars to state, territorial, and tribal governments.

“In addition to helping these governments address the revenue losses they have experienced as a result of the crisis,” according to the treasury department, “it will help them cover the costs incurred due to responding to the public health emergency and provide support for a recovery.”

The New Job Market

With Unemployment dropping to 6 percent, you may be tuning up your resume. New jobs are opening whether you are reentering the workforce or you are making a career change. 

The post-COVID employment picture will look a little different than it did before. For instance, most economists were surprised that 110,000 new construction positions were part of the 916,000 jobs added to the economy last month. 

In addition, the Biden Administration has proposed a massive infrastructure plan that could add all sorts of jobs in various fields.

Health, Tech, and Green

Most employment for 2021 and beyond will be in technical, medical, and green jobs, according to the U. S. Department of Labor. Among the top ten jobs, Labor includes in its list of the fastest-growing occupations, six or in the health field. The other four are wind turbine service technicians, solar installers, statisticians, and information security analysts.

A serious shortage of skills in fast-growing fields was emerging prior to the pandemic according to an American Action Forum (AAF) report. As the economy reopens, that shortage will rise again.

“This study estimates that, over the next decade, employers in nearly every state will face significant shortages both of workers with an associate degree or some college,” wrote AAF analysis Tom Lee in 2019.

FYI on IPO for Coinbase

Mark your calendar for April 14. That day history will be made.

Coinbase Global, the largest cryptocurrency exchange in the United States, will go public next Wednesday. It is the first major crypto company to launch an IPO.

Trading on the Nasdaq, Bitcoin will be listed under the symbol COIN. However, the company will not follow the traditional IPO route. Instead, current investors will convert 114.9 million shares for offer to the public. That practice is known as a direct offering.

We will follow up on Coinbase in next weeks The Wrap

Coinbase Offering Price

Coinbase plans to announce its reference or opening price the day before it goes public.

The company released a flush earnings report Tuesday. It announced 2021 first-quarter earnings exceeded earnings for all of 2020. Revenue of $1.8 billion produced earnings of between $730 million and $800 million in the first three months of the year, according to the Coinbase report.

Read More

What is Cashback? How Does Cashback Work?

3 Great Ways to Bring in Money When You Need It Most

Best Places to Put Savings From A Side Hustle

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Chip Shortage Reduces New Car Production and Sends Used Car Prices Higher

By Leave a Comment

shortage of semiconductor chips

With Spring in the air and the lure of the open road, you may be thinking of buying a new car. If you are, be sure to buckle up — you are in for a rough financial ride.

A worldwide shortage of semiconductor chips is playing havoc with the manufacture of new vehicles across all brands. More and more automotive plants are closing temporarily due to the shortage.

Used Car Prices Rising

“The auto manufacturers are in a situation where they can’t fill production to capacity,” George Peterson, President of automotive research and consulting firm AutoPacifc told Saving Advice. “At the same time, consumer demand is spiking. So there is a crisis in the supply chain. That means many consumers will move to the used car market. Because of the increased demand, consumers will pay more.”

Used car prices are already moving upward. In the first half of March, wholesale used car prices jumped 3.74 percent, according to the Manheim Used Vehicle Index.

“The latest trends in the key indicators suggest used vehicle values are likely to continue to see appreciation in the days and weeks ahead,” according to Manheim. Leading the way in used vehicle sales are pickup trucks.

New Car Supply

Most dealerships maintain a couple of month’s supply of all current year models. So inventory would not be affected immediately. However, a Wall Street Journal survey found dealers are experiencing inventory reductions. The uptick in sales that usually occurs in Spring and Summer will put more pressure on the supply line.

Meanwhile, manufacturers may be forced to reduce or halt the production of some models in favor of more popular ones, according to Peterson. In that case, high-profit vehicles, such as pickup trucks and SUVs will be prioritized.

Car and Driver has predicted that one million fewer cars will be manufactured in the first quarter of 2021. Already, manufacturers have announced reductions totaling 680,350. The result, according to the magazine, will be a loss of $61 billion dollars to the industry worldwide.

History Repeats Itself

We have seen this before, says Peterson. In 2020, many automotive plants closed for various periods of time. The reason for the closures then was COVID-19. Chip producers decreased production and shifted supply to other customers. When auto production ramped up again, there were fewer chips available.

Along with the shortage, the automobile industry has increased its use of semiconductor chips. As many as 100 can be found in some vehicles. They are used in everything from Bluetooth, engine management systems, road navigation, and collision detection systems.

That makes cars more expensive. Semiconductors make up around forty percent of the cost of a new car, according to consulting firm Deloitte. 

Possible Surge in Used Lease Cars

With the reduction in new car production, as Peterson says, consumers are more likely to turn to used cars. Fortunately, there may be a ready supply.

“Top of the line car sales three years ago totaled about 16 to 17 million,” says Peterson. “About 40 to 50 percent of those cars were lease cars and they are coming off lease, so there is a good supply of quality used cars coming on to the market.”

Some Manufacturers Reducing Chips

“GM is shipping some of their trucks without components that aren’t essential to safety or operation,” says Peterson.

General Motors decided to ship some Chevy Silverados and GMC Sierras without a nonessential chip. The decision results in a drop of one gallon per mile in fuel economy.

“When you’re trying to sell vehicles,” says Peterson, “fuel efficiency becomes less important.”

Is There an End in Sight?

No one has set a date for when they see the chip shortage ending and automobile production returning to normal. 

Manufacturers are scrambling for chips and chip producers are expanding operations. But building a new plant and getting it into production takes considerable time.

In the meantime, the semiconductor industry will face more strain in the future. Automobile companies are continually creating more tech-heavy vehicles. With the push to electric vehicles leading the way.

A Government Call to Arms

President Joe Biden has responded to the chip crisis with a call for money and action.

Wednesday, Biden called on Congress to authorize $37 billion to stimulate semiconductor chip manufacturing in the United States. In addition, the president signed an executive order to address the shortage.

“I’m directing senior officials in my administration to work with industry leaders to identify solutions to the semiconductor shortfall,” Biden said on Wednesday. “Congress has authorized a bill but they need $37 billion to make sure that we have this capacity. I’ll push for that as well.”

Biden was referring to the $37 billion needed to fund provisions of the National Defence Authorization Act. The law is aimed at boosting semiconductor chip manufacturing in the United States. However, Congress is yet to fund the legislation.

The executive order kicks off a 100-day review of supply chains for semiconductor chips as well as electric car batteries, rare earth minerals, and pharmaceuticals.

The president met with a bipartisan group of lawmakers Wednesday, before his televised remarks.

American semiconductor companies account for 47 percent of chip sales globally. However, only about 12 percent of chip production is done in the United States, according to the Semiconductor Industry Association.

Conclusion

The semiconductor chip shortage will be with us for an indefinite period of time. Scarcity drives prices higher. As a result, vehicles and many other products that use chips will cost more until the shortfall is resolved.

If there is a silver lining, it looks like the White House, Congress and the semiconductor industry are on the same page. 

Read More

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started. Check out these helpful tools to help you save more.

Weekly Wrap: Gas, Home Remodeling, Travel, GameStop, And FedCoin

By Leave a Comment

Thought gas is higher, travel is up

Gas prices, consumer spending on home remodeling, and travel are on the rise while GameStop continues its wild ride and the United States moves closer to issuing a digital currency.

Forecast For Gas Prices Higher

From February to mid-March, gas prices across the United States rose 40 cents per gallon to $2.86. Though prices leveled off this week to an average of $2.88 a gallon, analysts seem more price increases ahead.

“A dip in demand along with a simultaneous increase in supply and refinery utilization has contributed to slower movement in gas price increases,” said Jeanette McGee, AAA spokesperson. “On the week, 32 states had increases of only 3 cents or less. This does not mean gas prices have hit their peak, but is a positive sign for consumers.”

Supply and Demand

The prime mover in the price of gas at the pump is almost always the price of oil and consumer demand.

In 2020 demand plummeted as the pandemic raged. Oil production was exceeding demand by 3 million barrels a day, according to Forbes. High supply meets reduced demand equals lower prices.

All that changed earlier this month when OPEC+ announced at its March 4 meeting that the cartel is reducing oil production. Saudi Arabia alone has cut one million barrels of oil per day (BOPD). A barrel equals 42 U. S. gallons.

A Storm in Texas

Prior to OPEC+’s actions, U. S. refinery utilization dropped to 56 percent. That was a result in small part due to reduced demand. However, the major cause was the massive storm that hit Texas in February.

Even with the refineries recovering, experts see gas prices being elevated for the near term.

“The sustained OPEC+ production curtailment through April suggests that supply will remain constrained in the near term, even as demand continues to increase,” according to the U. S. Energy Information Administration (EIA). “As a result, EIA expects that further inventory withdrawals to meet rising crude oil demand will keep crude oil prices elevated through at least the end of April.”

Higher Prices Long-Term

Writing in Oilprice.com, David Messler, who worked in oilfields on six continents, also sees oil prices leveling off.

“For gasoline, the primary motor fuel used in the U.S. moves gradually higher in the second half of 2021, and then moderates in 2022, just below the levels of 2019,” Messler wrote. However, his long-term view is less optimistic for consumers.

“Long-term we are expecting a spike in crude prices as shrinking supplies fail to meet rising demand,” wrote Messler. If he is right, that means you will be paying more at the pump down the road.

Travel Rebounding

Around the world, people are traveling and planning to travel for leisure again. In response, hotels, airlines, and cruise ships are cutting prices, expanded bookings, and relaxing cancellation policies.

The World Trade Organization, International Air Transportation Association, and hospitality research firm STR all agree that 2020 was the worst year in the travel business.

However, 2021 and beyond are looking much better.

Booking Increasing

According to a recent report by Tripadvisor, bookings for domestic travel are on the rise now with international travel picking up steam from May on. 

The travel platform noted that about 70 percent of leisure bookings the first week in January were for domestic travel. May through August are the most popular months. Eighty percent of Americans surveyed planned at least one overnight leisure trip this year. About one-third said they were planning three or more domestic trips in 2021.

Vaccinations Fuel Optimism

The rollout of COVID-19 vaccines has been cited as the main reason people are traveling again for pleasure. Seventy-seven percent of those surveyed globally say they will travel internationally if they get the vaccine. In the U. S. the figure is 80 percent.

“Consumer appetite for travel is as strong as it has been since the start of the pandemic and, as our data shows, many people are already actively planning their next big trip – even for trips more than four months out,” said Shibani Walia, senior research analyst, Tripadvisor.

Remodeling Boom Building

Not all business suffers in a pandemic. Delivery companies are prospering with FedX and UPS posting higher earnings. Amazon and Walmart have also increased profits. And there is a boom in the remodeling industry.

The market for new homes has tightened during the pandemic. Many people found themselves priced out. They turned to remodeling in an effort to:

  • Make their homes more livable.
  • Accommodate remote work
  • Include other family members

Harvard University’s Center for Housing Studies, through its Lending Indicator of Remodeling Activity (LIRA), tracks home improvement trends.

Spending Up This Year

LIRA spotted the increase in home remodeling in 2020 when spending on such projects reached $339 billion. The boom is projected to continue in 2021 to $352 billion, according to LIRA.

For a detailed examination of the remodeling boom and its impact on you, your wallet, and how you live, read Monday’s article in Saving Advice.

GameStop Won’t Stop

This was the week veteran Wall Street value traders were expecting GameStop to get its comeuppance. Instead, it got renewed support and saw a continued changing of the guard.

After dipping 34 percent by the close of Wednesday, GameStop stock made up its losses Thursday. Investors started buying again at around $125 a share. The price rose 53 percent.

GameStop closed Friday at $178.84 a share, down about $5 a share.

Brutal Beginning

GameStop stock was beaten down the first three days of the week on expectations that Wednesday’s earnings report would be dismal. 

Analysts expected GameStop to hit $1.35 per share on revenue of $2.21 billion. Instead, it earned $1.34 per share on revenue of $2.12 billion. 

Shift to E-Commerce

One bright spot was the company’s announcement that e-commerce sales increased 175 percent last quarter. That accounted for one-third of the company’s revenue for that period. 

GameStop has been shifting emphasis to e-commerce in the last five months. To facilitate that pivot, the company recently hired Jenna Owens as its new chief operating officer. She is a former Amazon and Google executive.

More good news came for GameStop Thursday. It was picked as a buy recommendation by short-term stock analyst firm Zacks Rank. 

FedCoin Getting More Attention

The Federal Reserve’s interest in developing its own cryptocurrency is picking up steam. 

Lael Brainard, Federal Reserve Board Governor, told a conference at the Stanford Graduate School of Business the central bank is currently exploring all aspects of digital currency,

The Fed is not alone in its interest in cryptocurrencies. Most central banks around the world are either researching or creating their own digital currencies, according to a survey by the Bank of International Settlements.

The Facebook Threat

Increasing the interest of the Fed and other central banks is Facebook’s proposal to introduce its Libra digital coin as a new global settlement currency. The idea is to back the Libra with existing monetary reserves, primarily the dollar. 

It’s the idea that Libra could replace national currencies in international commerce that has drawn the interest of central banks. The fear is that a private company with that sort of monetary control could have political leverage over nations.

There Are Risks

Not referring to Facebook or Libra, Brainard noted risks in private companies having too much influence.

“Some of the new players are outside the financial system’s regulatory guardrails, and their new currencies could pose challenges in areas such as illicit finance, privacy, financial stability, and monetary policy transmission,” Brainard told the Stanford conference.

Bottom Line

It’s early and there is still a long way to go, but an upswing in travel and single-family renovations are positive economic signs. High gas prices look like they are here for a while. GameStop continues its gyrations and U. S. national cryptocurrency seems on the way.

Read More

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started. Check out these helpful tools to help you save more.

How To Make Your Pandemic Lay-off a Plus

By Leave a Comment

 

If you are one of the 40 million Americans laid off during the pandemic, you know what a blow that is to your finances and self-esteem. But it may also be one of the best things to ever happen to you. You can make your pandemic lay-off a plus.

You Are Stronger Now

“What doesn’t kill you makes you stronger,” is an old saying. It applies to fighting through a COVID layoff.

You are stronger now than you were before COVID-19 because you’ve had to be. It is important to remember that. The pandemic is fading, the economy rebounding, and the job market reopening. Now is the time to make your pandemic lay-off a plus.

Now Is Your Time

There are two important things to consider if you have been laid-off. 

The first is time. Now you have more of it. Americans devote 90,000 hours of their lifetimes to work.  Taking a few of those hours to get a perspective on your life and career is invaluable.

Secondly, is the opportunity to take control of your career path.  Because you have only worked in one field, you may feel your options are limited. However, If you want to change your career, now may be the best time to do it.

Expand Your Career Choices

But what if you can not figure out what you really want to do the rest of your life? Daydream.

Author Neil Gaiman has said most of his ideas come from letting his mind wander. 

Think about what gives you the most joy and fulfillment. Let that ruminate in your thoughts and see what comes out. 

A New Economy With New Opportunities

The work environment and some jobs have changed during the pandemic. 

Ambika Nigam is the founder of Zeit, a platform to help people “pivot” from one career to another. Working with his clients, Nigam told Fortune Magazine he has learned the pandemic has brought about several changes in employment.

  • Jobseekers and employers are looking to connect the job/employee to a mutual purpose.
  • Geography is no longer a barrier to employment. Even before the pandemic, some employers in high-cost areas were encouraging remote work. Now it is almost the norm in many industries.
  • Adaptability has become more important. Before the pandemic companies looked for a more focused mindset. Now they are looking for people who are flexible in their thinking.
  • Job candidates with a variety of skills and knowledge are more sought after. If you have trained across several disciplines, you may have greater value.

Marketing Yourself for the New Job Market

Changing or continuing your current career path will require personal marketing. Here are a few suggestions. 

  • “Pace yourself,” says Meredith Stoddard, Vice President of Life Events Planning at Fidelity Investments. “Decide how many hours a day you’ll dedicate to job searches, networking, interviewing, and self-discovery.”
  • You want to show a prospective employer you have kept up or added skills. Thanks to online learning, you can take courses and attend free webinars. Many classes offer free certification.
  • Upgrade your resume and Linkedin profile. Searching Linkedin contacts may lead to an interview.
  • Social networking can also help. Both Linkedin and Facebook host professional groups that may present job opportunities.
  • Work from home while you look for permanent employment.  Some job boards that try to screen for legitimate work include FlexJobs.com; Remote.co, and WAHVE.com.
  • You can also sign-up to these Freelance Marketplaces
PlatformsBest For: 
FiverrFinding Freelancers
BarkFinding Unique Freelancers
AppjobsGig Economy Professionals

Conclusion

Taking care of yourself is also important. Get outside every day. Stay connected to family and friends. View this time as your new opportunity to plan the future you want.

Read More:

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Should You Consider a Personal Loan During a Recession?

By Leave a Comment

Your income is faltering, and you’re trying to pay down previous obligations. You desperately crave an influx of funds to help keep you going until times get better, and you can get back on your feet. A friend suggests that you take out a loan. Would this be a smart move, you may wonder?

The answer isn’t absolutely clear-cut. The right personal loan can help you weather a recession, but the wrong one may dig you deeper into debt. Read on, and we’ll talk about the ins and outs of personal loans, especially in the current economic climate.

In This Article:

  • Personal Loan Basics
  • Advantages of Personal Loans
  • Disadvantages of Personal Loans
  • Applying for a Personal Loan
  • Typical Personal Loan Terms
  • What Is the Interest Rate on a Personal Loan?
  • What Can I Do with Funds from My Personal Loan?

[Read more…] about Should You Consider a Personal Loan During a Recession?

Here’s How to Use a Weekly Savings Plan to Improve Your Budget

By Leave a Comment

weekly savings plan

I recently attempted a no-spend month challenge. However, I didn’t succeed because I made several money planning mistakes. I considered trying it again for June. Then I changed my mind. Instead of doing a no-spend month, I’m trying something different. I’m using a weekly savings plan to improve my budget. This seems like a more practical approach for me given my current financial state.

What is a Weekly Savings Plan?

I should note that a weekly savings plan is very different from a no-spend challenge. However, in both instances, the point is to save money.

My goal with the no-spend challenge was essentially to spend as little as possible. Therefore, I would save as much as possible.

Similarly, a weekly savings plan is all about saving money each week. However, it may or may not be about “saving as much as possible.” Rather, it’s about setting a weekly savings goal and sticking to it.

This allows for more wiggle room than the no-spend challenge. After all, if I have $500 left at the end of the week, after paying bills, then with a no-spend challenge I wouldn’t spend any of that. If I’ve set a weekly savings goal of $300, I would have $200 left for spending. If it’s a struggle to not spend any money at all, that extra spending money can make things easier.

Benefits of a Weekly Savings Plan

Obviously, then, the benefit of a weekly savings plan as compared o a no-spend challenge is that you can still spend some money. Not having any frivolity throughout the course of an entire month can be daunting. It’s easy to fall off that horse, as I did last month.

In contrast, a weekly savings plan is a positive goal. “I’m trying to save this much” vs. “I’m not allowed to spend.” The positive twist makes it feel more doable. It is easier to stick with.

Of course, this would be true of any savings plan that’s framed as a goal. So what specifically makes the weekly savings plan a great idea? What’s most true for me, particularly as a freelancer, and particularly during pandemic time, is that it’s a very short-term goal that keeps resetting at the start of each new week. This is great because:

  • I don’t currently know exactly what I’m going to earn each month. Between changing jobs and clients making late payments due to their own COVID hardships, my income just isn’t clear. It’s a lot easier to see what I made last week or even to predict what I’ll make next week than it is to look at the entire month ahead. Therefore, a weekly savings plan makes a lot of sense right now.
  • I only have to meet a one-week goal. Therefore, the actual amount of savings could be tiny. It’s doable. And yet, it adds up. I get to save money for an emergency without feeling the pinch of setting aside too much at one time.
  • If I fall off course, I can easily reset the following week. Once I fell off course with my no-spend month, it felt like, “well, that didn’t work” and I kind of gave up. But this plan resets every single week. Hopefully, I’ll save the money each week. However, if I don’t, I can start again the next Monday.
  • The weekly reset also means that I can consistently recalibrate my goal. If it turns out that I’m not realistically able to save as much as I thought, I can review my budget. I can see where to make changes. And, if I’m lucky, and it turns out that I could save even more, then I can make a new plan in that direction as well.

How to Create a Weekly Savings Plan

So, does this sound good to you? Great. But how do you do it? Here’s my approach:

Where Do You Want to Put Your Savings?

What savings accounts do you already use? Is this where you want to put your money? I have two major savings accounts: a small one trough my regular bank and another high-interest savings account through WealthFront. I intend to put my weekly savings into the WealthFront account. But do what works for you, depending on how easily you do (or don’t) want to be able to access your savings.

Where Can You Pull Money From?

Before asking yourself how much you want to save each week, first ask: where could I stop spending? I combed through all of my subscriptions and spending habits to discover where it would be extra easy to cut back. For example, I was paying $19.99 per month for Lyft Pink. However, under quarantine, I’m not using Lyft as much. So, I can easily pause that account. Instead of spending that money elsewhere, I can put approximately $5 per week into my savings account.

Check to see if you can cancel the following things and redirect that money to savings:

  • Delivery service subscriptions including those associated with Amazon and Postmates
  • Streaming TV services such as Hulu or Netflix
  • Other monthly streaming services such as Audible or iTunes
  • Gym and spa memberships, especially if you aren’t attending during shelter-in-place
  • Online storage systems that you might not be using such as Dropbox or Google Drive

Similarly, it’s a great time to review where you might be able to reduce spending. For example, have you checked for discounts on your phone bill or cable bill recently? If you can save $10 or $20 per month, that’s money that can go into your weekly savings plan.

In other words, look at every single monthly subscription that you pay for. Cut out what you can. Divide the number you were paying monthly by four and add that to what you put into weekly savings.

Automate Your Weekly Savings Plan

As long as you aren’t on the brink of running out of money in your checking account, I highly recommend automating your savings. Once you’ve figured out how much you can save each week, set it up so that your checking account automatically transfers that amount weekly into savings. For example, if you can save $20 per week, change your account settings to automatically transfer $20 from checking to savings every Monday.

Do a Weekly Review

This part really helps. At the end of each week, review your money. Did you earn what you expected? Did you spend what you expected? As a result, did you save what you expected? If you have to adjust your weekly savings plan accordingly, do so.

Most importantly, check if you have any more money at the end of the week than you anticipated. If you do, set aside a portion of that as bonus savings for the week. You might want to create a rule. For example, “I will add 10% of any extra money for the week to my savings account.”

Can You Earn More In Order to Save More?

Whenever you create a savings plan, it’s important to also look at where you might earn more income. What could you do this week in order to have more money next week? Could you do a quick freelance gig? Maybe you could declutter and sell some items? You might put all of your extra income into your savings. Alternatively, you might put a percentage of what you earn aside each week.

Other Weekly Savings Plan Ideas

My approach is only one way to do a weekly savings plan. Here are a few other options:

  • Set a specific savings goal for the year, quarter, or month. Then divide that accordingly to figure out what your target weekly savings goal is. Plan your budget to accommodate this goal. This is especially helpful if you’re saving up for something specific such as a wedding or a vacation.
  • Try an incremental weekly savings plan. Save $5 in week one. Save $10 in week two. Then, save $20 in week three. You can keep adding it up throughout the year. Alternatively, you can start over at the beginning of each month. This is a low-key way to challenge yourself to save more. There are many variations on this. Check out the 26-week savings challenge and the bi-weekly savings challenge as two examples. The Daily Nickel Challenge is yet another variation on this.
  • You can also do the reverse of the incremental plan. You can start by setting aside a higher amount each week for one month and then a little bit less per week the following month. Here’s an example of this kind of plan.
  • Use a physical calendar to mark down what you get paid and what you “owe” yourself each week for savings. Here’s more info on that.

Do you prefer to budget by the week, the month, or the quarter? Why does it work for you?