Personal Savings Strategies - Assignment Example

Part I It is important for people to save money throughout their lifetime in order build financial wealth for their future (Fdic, . I personally need to start life changes in my personal finances to save money. The first step I must take is to identify the sources of lazy money. Some of the lazy money expenses include excessive spending in consumer goods, high gasoline expenses, and entertainment costs. I often go to the mall to purchase clothes, electronics, and other items. “Some of the most insightful writing about the American character over the nation’s history has been about neither freedom nor democracy but about the crazed impulse to acquire things” (Uoregon, 2001).

I can possible save over $50 a month if I control my impulsive buys. My gasoline expenses are high because my SUV vehicle wastes a lot of gas. I could invest in acquiring a hybrid vehicle that gives at least 40 miles per gallon. My gasoline expenses would be reduced by at least 60% by acquiring an economical vehicle.Part II My personal savings plan starts by establishing a realistic goal of how much I must can save based on my personal expenses. My personal income is $2000 a month. I must add my variable and fixed expenses to determine a budget that exceeds my expenses.

People that spend more than what they earn are always in debt because they finance their excess living expenses through debt instruments such as credit cards. The table below shows my financial personal plan based on my income and expenses. Income2000Expenses:Rent600Utilities250Food275Loans250Gasoline300Clothes150Entertainment100Car insurance75Total expenses2000Savings0The budget above is my best estimate of my monthly expenses. The two tactics I’m going to use are lower my clothes and entertainment expense by $50 and to lower my gasoline expenses.

I will trade in my SUV for a used vehicle that gives 40 mpg. The value of my vehicle is above $20,000, thus I have some options to achieve my goals without having to increase my budget by buying a new car. I expect to obtain a gas savings of 60% which would lower my monthly gasoline expenses from $300 to $120 month. The new budget of the next five years is illustrated below:Income2000Expenses:Rent600Utilities250Food275Loans250Gasoline120Clothes125Entertainment75Car Insurance75Total expenses1770Savings230 My new monthly budget will allow me to save $230 a month.

My total yearly savings are $2760 a month. A conservative estimate for the next five years is that my savings will continue at the same rate for the next five years. The reason that the estimate is conservative is because my income will increase due to a higher level of educational attainment. The same assumption will be applied for the 10 year and 20 year financial goals. Based on a 2% interest in savings for the next 5 years my savings will be $13,269. In 10 and 20 years will be $25,288 and $46,033 respectively (Calculatorsoup, 2012).

It is hard to estimate income and expenses in the future because life changes and several factors such as a larger family affects cost of living expenses. ReferencesCalculatorsoup.com (2012). Present Value Calculator. Retrieved May 14, 2012 from http://www.calculatorsoup.com/calculators/financial/present-value.php Fdic.gov (2012). Savings-Related Resources. Retrieved May 14, 2012 from http://www.fdic.gov/deposit/deposits/savings.html http://www.fdic.gov/deposit/deposits/savings.html Uoregon.edu (2001).

America’s Crazed Consumerism. Newsweek. Retrieved May 14, 2012 from http://pages.uoregon.edu/recycle/events_topics_Consumerism%20_text.htm