The types of expenses you should make a savings plan for include essential living costs such as rent or mortgage, utilities, groceries, transportation (car payments, insurance, gas, public transport), healthcare (insurance premiums, prescriptions, medical visits), debt payments, and family care expenses (childcare, elder care). Additionally, it’s important to plan savings for irregular but predictable expenses like car maintenance, home repairs, and personal care, as well as discretionary spending like entertainment and travel. Ultimately, including a category for emergency savings to cover unexpected expenses like medical emergencies or job loss is critical for financial stability.
Major Expense Categories for a Savings Plan
- Living expenses: Rent/mortgage, utilities, groceries, clothing, insurance
- Transportation: Car payments, insurance, gas, maintenance, public transit
- Health care: Insurance premiums, medical visits, prescriptions, dental and vision care
- Debt payments: Credit cards, student loans, personal loans
- Family care: Childcare, school supplies, elder care, pet care
- Personal care: Toiletries, grooming, laundry
- Entertainment and travel: Dining out, hobbies, trips, streaming subscriptions
- Irregular expenses: Car/home maintenance, medical copays, school fees
- Emergency savings: Fund for unexpected costs like repairs, medical emergencies, or income loss
Savings Plan Tips
- Track all expenses thoroughly and categorize them.
- Include saving as a regular, budgeted "expense" to prioritize it.
- Aim to build an emergency fund covering 3 to 6 months of essential expenses.
- Adjust savings for short-term and long-term financial goals, including retirement and special trips.
Having a comprehensive savings plan that covers these varied types of expenses helps build financial security and prepares for both predictable and unforeseen costs.
