Setting Realistic Money Saving Goals
Saving money is no easy task. It can feel as though when you finally take a step in the right direction, an unexpected expense arises and you end up two steps back. As we all know, it's easy to fall into a pile of debt and it's extremely difficult to pull yourself back out. One step we can all take is financially planning for the future and whatever life throws at you. Before we can do that though, we need to set money saving goals for ourselves. Not just goals, realistic goals: ones that we can handle with our ever-growing list expenses and payments. To get some insight on how we can all get a handle on our finances, we went straight to the finance experts. With the question of, "how can we set realistic money saving goals?"
Here's what they had to say:
Jason Price of One Money Design
I think it's important to find a place in a personal budget each month for savings outside of investing for retirement. For our family, giving to our church comes first and savings is number 2 in our priorities. With a young family, I find it difficult to have money for savings, especially if you start to consider all the expenses we have each month. When we save the most, we are automatically moving the money out of our checking account as soon as I get paid. It's too easy to spend when it's there.
I think the percentage for saving varies based on where you are in your financial plan, i.e. Dave Ramsey's baby steps. Obviously, if you have a lot of savings already, the percentage of take home pay for cash savings may be much lower. But if you don't have much, if any, savings, your percentage will be much higher since it's a higher priority in your plan. Overall, I don't get caught up too much in the percentage, but rather, I focus on the goal. We have in mind what we want our ideal savings goal to be. This means we sacrifice things we want and sometimes stretch to save more each month because we're motivated to achieve our goal.
In conclusion, I would recommend setting a savings goal, automate the savings, save more some months when you can stretch yourself, and look for ways to earn extra money to contribute to the goal. Don't become discouraged if you can't save much to begin with. Start small and increase it every month. You'll know when you're doing it right if you're moving forward in your plan and your balance is steadily increasing.
Ben Edwards of Money Smart Life
Author of "Debt Heroes"
The simple answer to how much money you should be saving each month is "as much as you can". Setting goals and figuring out how much you need to save for them is a good exercise because it shows you the gaps between where you are and where you'd like to be. It gives you a target to aim for, helps you prioritize what you want in life, and motivates you to make a plan and stick with it.
However, life is full of surprises. You could get fired or fall in love. You might divorced, get sick, or start some crazy new business. Whether chosen, or forced on you, your new reality or new goals could require a lot more money than your old ones.
That's why I say to save as much as you can. Having savings gives you options and more flexibility when life shifts. You should definitely still set goals. Simply be aware that the money you're putting away might end up shifting towards a different goal.
I think it is smart to set a specific amount you want to save each month. If you just try to "save as much as possible" without tying a number to it then you'll likely end up saving less.
Carrie Smith, Financial Strategist, of Careful Cents
Visualize yourself already completing your goal, then map out a plan from there. When I was striving to be debt-free, I thought of all the things I could spend my money on, places I could go and people I could help, if I wasn't spending my hard-earned money on debt payments. That was a huge motivator for me to stay on track, and I actually reached my goal 6 months faster than I originally planned!
As all of our finance experts mentioned, setting financial goals and saving money is difficult in the material world we live in. Start small with your goals but think big and visualize your life will less money woes. We at Coupon Craze want to give a big thanks to our experts for their awesome contributions and encourage our readers to visit their blogs for even more money savings tips and tricks.