With all that’s happened in the past year, it’s no wonder that financial planning is at the top of people’s minds. According to the U.S. Bureau of Economic Analysis, the average American now saves around 13% of their personal income a month – up 5% from a year ago.

Learning how to budget and save money is achievable at any age. Here’s how to start your financial plan.

How to make a personal budget

You can’t plan for the long term without first figuring out where your money goes. If you’re wondering how to budget better and save money, begin by tracking and categorizing your monthly income and day-to-day expenses.

A few good places to look:

• Bank statements
• Utility bills
• W-2s and paystubs or 1099s
• Credit card bills
• Receipts
• Loan statements

It’s important to get everything laid out to create a workable budget, so go back through at least three or four months of expenses to better budget and save. Don’t forget to look for those one-time or per-year charges, too, like annual subscriptions or bulk insurance payments.

Once you’ve got all your expenses down, divide them into two categories: fixed and variable. Fixed expenses are mandatory bills that cost around the same amount each month, including rent, internet service, and car payments. Variable expenses tend to fluctuate, like your grocery or takeout bill.

Calculate a “monthly average” of each category, or how much you generally spend. You can also just take the highest amount you’ve spent recently to ensure those bills are always covered. These averages will become the foundation of your personal budget, which you can plug into any spreadsheet or budgeting app.

So where should your money go? After accounting for taxes, one simple framework to follow is the 50/30/20 principle:

• 50% for needs (housing, utilities, car, groceries)
• 30% for wants (entertainment, takeout, clothes, vacations)
• 20% for savings and investments

You may not be able to hit these numbers right away, but they’re a good goal to guide your spending. Keep in mind that spending habits and needs can change over time, so don’t be afraid to make adjustments when needed.

Ways to save money long-term

Now that you have a budget in place, it’s time to think beyond the short term. Adding savings to your budget is a great first step, and there are a few ways you can keep that amount growing:

• Set some financial goals to work toward so you can save intentionally, like opening a retirement account or paying off high-interest debts.
• Establish a small emergency fund of $500 or $1,000, and then work your way up to three to six months’ worth of living expenses in emergency funds.
• Find ways to spend smarter, like making annual payments instead of monthly ones for discounts, automating insurance payments, and reducing your number of subscriptions.
• Ask your employer about their 401(k) plans and whether they will match your contribution for retirement planning.

Saving is all about looking ahead. Buying a life insurance plan is a smart way to invest in your future, and it’s more affordable than you might think.

More than half of people estimate the price of life insurance at triple the actual cost – and younger Americans estimate it to be five times the actual cost on average. The real cost?   A healthy 30-year-old male can buy a 30-year, $250,000 term life policy for from Fidelity Life for as little as $29 per month. For less than the cost of a monthly cable subscription, you can provide your family with a potentially large financial cushion later.

Financial planning with life insurance

It’s never too early (or too late!) to be smart about your finances. Whether you hire a professional or do it yourself, planning ahead can help you navigate your day-to-day budget and major milestones like buying a house, saving for your children’s college, and career changes more successfully.

A good financial plan should help you protect the things you can’t afford to lose – and that’s where life insurance comes in. Investing in a policy can help you meet financial goals at any age:

• 20s: Starting your first job out of college or getting ready to move across the country? Life insurance can protect those plans and take care of debts or lingering student loans if something happens.
• 30s and 40s: At this stage of life, you may have a growing family or a lot of big expenses to handle, like a mortgage and retirement fund. Term life offers affordable protection that helps you maintain your lifestyle, without worrying about the future.
• 50s and beyond: As you near retirement and finish paying off that house, you may have begun to make some end-of-life decisions. Life insurance plans like final expense ensure you have a plan in place to cover funeral costs, medical bills, and leftover debts.

As you’re learning how to save money, financial planning helps you make the most of what you have while keeping your goals on track. No matter what your age or situation, you can make a plan that fits your needs.

At Fidelity Life, we’re committed to supporting you and helping protect those you love. Learn more about how you can get the coverage you need by getting in touch with us today.

At Fidelity Life, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed, and updated regularly to ensure the information is as relevant as possible.