Trying to make smarter spending decisions? Savings plans give structure to finances, enabling short- and long-term planning with effective budgeting.
This article dives into what a savings plan is, how to build one, potential benefits, and answers to frequently asked questions.
A savings plan is a blueprint for saving money that helps people make financial decisions and reach financial goals. Savings plans give structure to day-to-day spending, tracking incomings and outgoings while minimizing unimportant purchases.
A savings plan works together with a savings account — which is a place to put money away and build wealth over time. A high-yield savings account, like PayPal Savings1, can also offer compound interest with a beneficial annual percentage yield (APY), helping boost financial growth.
Different savings plans can be tailored for specific goals and may include the following types of funds:
When a savings account is designed for a specific goal or expense, it may also be known as a sinking fund. Use savings apps to help savings plans and sinking funds stay on track.
Consider these tips when building a savings plan:
Some of the potential benefits of a savings plan are:
There are potential challenges that come with savings plans. These may include:
Unexpected costs and household expenses are a part of life. But it’s possible to both plan for and handle them without a savings plan being derailed. Consider these financial discipline tips to help avoid unnecessary spending and stay on track:
It’s essential to review a savings plan at regular intervals. Monitoring progress further helps to make easy adjustments should any personal financial situations change.
Personal finance software and budgeting apps can also help individuals stay motivated and on track to meet savings goals.
Savings plans are an essential part of a broader approach to financial health, helping provide a personal safety net and a pathway to achieving important financial goals.
Learn about PayPal Savings.
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