Saving for a Goal
We all have wish lists, but we don’t all have the cash on hand to pay for them. Whether it’s a “need” like college tuition or your first home or a “want” like a vacation or a new car, we sometimes have to approach major purchases as a financial goal that requires a plan to make it happen. Taking time to work through each step to create a plan will help to make sure you get what you wished for.
Determine Your Goal
The first step in achieving your financial goals is determining what your goals are. Consider what it is in life that you would like to purchase. Refrain from considering the cost. Do you want to purchase a computer, a new home or increase your savings account? Once you identify your goals, it’s time to decide on your desired time frame.
Create Your Timeline
With your goal in hand, you need to determine a realistic time frame for when this purchase will be possible considering your existing and future assets. Knowing these three factors, you can calculate how much you need to set aside each month. For an easier way to determine your monthly savings, you can use a savings calculator. Often the cost of the item desired, along with your current financial portfolio and future income, will determine if your goal is short-term (less than a year), mid-term (less than 5 years) or long-term (5 years or more).
“Setting up a timeline to reach your savings goal is important, because it provides you with benchmarks, so that you can track your successes and progress,” said William Crosswell, VP, Service and Sales at Ardent Credit Union. “Knowing when you need to save and how much is just as crucial as knowing what you’re saving for.”
Keep It Real
Is the amount you need to save each month to meet your goal realistic? In order to determine this, start by taking your current income and subtract your expenses. If your monthly savings for your goal exceeds what’s left after your expenses, think about extending your time frame, which will decrease the monthly amount you need to save.
Another option is to consider making changes to your income, your spending or both. Start by identifying what your wants and needs are in your everyday purchases. For example, you may need coffee every day before work, but want it from a high-end coffee shop. Try changing your daily routine and brew at home. You may be surprised how much money you will save with this one habit change. You can also try other methods of generating an income like picking up a side hustle. If you still fall short after making adjustments to your budget, you may have to rethink your goals. Prioritize what can and cannot wait, doing this will benefit you in the long run.
Use Automatic Transfers
For a simple way to keep your savings plan hassle free, have the money you are putting away for your goals automatically directed into savings each pay period. Your employer may allow you to direct some of your paycheck electronically to savings. Or you can easily set up automatic transfers within eBanking. For example, Ardent’s eBanking system allows “any member to transfer money at the same time each month with just a few clicks,” said Alexandra Lippo, Ardent’s eBanking specialist.
No matter how big your goal, the key to success is to develop a workable plan and stick with it.