Three Keys to Successful Saving
Saving money can be easy or it can be extremely difficult. Why should you save? To set aside money you could spend today…so you can spend it tomorrow! Ask yourself some hard questions:
What would happen if…
- You lost your job?
- You got sick?
- You had an emergency?
How will you pay for big purchases? Will you be able to retire?
What makes the difference? Understanding the Keys to Successful Savings! The theme for Saves Week focuses on these three key components of savings: Set a Goal, Make a Plan, Save Automatically.
Today let’s focus on the first part of Successful Saving–Set a Goal.
What do you want? Are you searching for ways to save money to pay off late bills or keep up with this month? Do you need to go to the dentist, buy or fix things for your home and family, pay for day care, or train for a better job? Do you want to buy a bicycle for your kids and/or send them to college? Without clear goals, you don’t know where you’re going.
Financial goals identify what you want to do with your money. Goals give you direction. They give you a purpose for the way you spend your money
What constitutes a goal? A statement such as “I want to save money” is too vague. It becomes a realistic financial goal by adding a dollar amount, and a time frame. For instance, “I want to save $25 a week for 12 months”. An actual goal, however, would depend on an individual’s or family’s income and values.
Make your goals SMART! Creating SMART goals gives us an action plan for reaching the goals we set.
Specific -Write down exactly what it is you want to accomplish. For example, instead of writing “I want to pay off credit card debt,” write, “I want to pay off the $5000 balance on my Visa Card.” Instead of writing, “I want to start an emergency fund,” write, “I want to save $1000 in an emergency fund.
Measurable –Financial goals are measured by a dollar amount, and you want to be able to see the progress you are making toward your goal. In the example we used before, if I want to pay off $5000 in credit card debt, I need to figure out how much money I need to pay per month, based on my deadline (this is the Time-Bound part- we’ll get to it shortly). If I wanted to pay it off in 12 months, I would need to pay around $420 per month (plus a little extra to cover interest and fees). Each month, I will see measurable progress toward my goal as my balance decreases.
Adaptable –With finances, we always need to be adaptable. Things change, life happens, emergencies come up, and we have to change our plans. Make sure that your goals are adaptable for changes in your financial situation. For instance, if you figure out that you want to pay $300 per month toward paying down your credit card debt, but then you have some unexpected expenses one month, you may have to pay less this month and either make up for it next month or stretch out your timeline.
Realistic –One of the biggest reasons we do not reach our financial goals is because we set the bar too high. If I only have $100 extra dollars in my budget, but I commit to paying $300 toward my credit card bill, I am setting myself up for failure. I could make this goal more realistic by 1) lowering the amount I plan to pay toward my credit card bill and stretching out the time I will be paying it down or 2) looking for other places in my budget where I can cut expenses in order to make this payment possible.
Time-Bound –Set deadlines for your financial goals! If you are anything like me, tasks without deadlines get pushed farther and farther down my to-do list. If you are serious about meeting your financial goals, set deadlines by which you want to accomplish them. This will also help you to determine how to measure your goals (see making your goals measurable above.
The second key to successful savings is to MAKE A PLAN. No matter what your financial goals are, it is important to map out a plan for achieving success.
The final key is to SAVE AUTOMATICALLY. Have part of your paycheck deposited into savings or transferred from checking to savings. You can also participate in retirement accounts that have automatic deposits made each pay period. This makes it easy to save and removes the temptation of having that money easily accessible.
As part of SAVES WEEK, there will be an on-line presentation and discussion about the Keys to Successful Saving on Tuesday, February 26, 11:30-12:30 CST. This might be just the motivation you need to get started saving!
February 26
3 Keys to Successful Savings –Create SMART goals, find money to save, make a savings plan, and choose the right savings accounts to reach your goals. http://bit.ly/3KeySaves. Participating is easy and free! We will send you a reminder email and the login instructions! Hope you’ll join me!
Don’t forget to join other savers…Become an Okaloosa Saver http://bit.ly/Al9BuH or Florida Saver at http://fycs.ifas.ufl.edu/Extension/FinancialManagement/FloridaSaves/Florida_Saves_Enrollment_Form.pdf.
Additional webinars will be held during Saves Week (all times are 11:30-12:30 CST):
February 27
Goal – Based Investing – Learn how to use a goal-based investment strategy to achieve financial goals. Learn to effectively develop a financial plan and choose investment accounts that work for particular goals. http://bit.ly/UFINVest
February 28
Tips for Tax Preparation & Filing – Review options for free tax filing, tax credits & tax deductions. Tips to analyze returns to help with financial decisions. http://bit.ly/TaxFil
Prepared by: Elaine A. Courtney
Family & Consumer Sciences Extension Agent
UF/IFAS Extension-Okaloosa County
850-683-8431
