Specific Saving Goals To Increase Accountability
The successes in my life have everything to do with accountability. Without accountability, I tend to let things drift. There always seems to be something else out there that is holding me accountable that i need to deal with, and I let the things that can slide, slide. That’s the main reason I started this blog - once I committed in my head and heart to debt reduction, I needed an outlet to keep track of what I was doing and keep me accountable doing so.
Saving money has always been a nebulous area for me. There are many things one should save for, but few hard and fast numbers I can hold on to. The starting point is an emergency fund, and with some thought, research, and planning, I can come up with hard and fast numbers to latch onto there. But I also want to save for retirement. But I have no real idea how long I’ll live, and how much I’ll need. I want to save for my kids’ college educations, and I can make some guesses but I’m not sure what i need there, either. And what about future life changes, like home improvements, new (to us) cars, and other things that come up?
Without hard and fast numbers, I tend to let things drift. Which is why setting specific goals is so important for success in these areas. With debt reduction, there have been specific numbers and targets to reach all along the way. This has been a key element to my success at it thus far. But with saving, the idea of saving “everything I can” isn’t a good long-term outlook. I can only live in a position of deprivation for so long before I start to rebel against it. I have become accustomed (and even enjoy) some of the “deprivations” we’ve created, but life is, after all, meant to be lived. There needs to be a balance of enjoyment and sacrifice (within one’s means, of course) in any life. So setting specific savings goals will be key to becoming a successful saver.
So that’s my goal for the next few months. As I start to see the light at the end of the tunnel on my non-mortgage debt, I’ll start to figure out how to set realistic savings goals, how to make them motivating, and how to reach them.
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November 17th, 2008 at 9:17 am
how about setting aside a percentage of your income, instead of “saving everything possible” when it is time to prepare for retirement? I think once we are out of debt we are going to try to make sure that 15% goes for retirement, 5% for university for our kids, 2% for family vacations, etc. ?
November 17th, 2008 at 10:06 am
Boy, can I relate to this article. My initial strategy for paying off debt was to put everything leftover from my paycheque (after rent, groceries, car insurance) onto my debt. It worked alright when I was living in a tiny one-room apartment (I managed to pay off my student loans), but once I bought a house, it just didn’t work for me anymore. Now I’ve actually had to set up specific savings accounts (or just virtual accounts in quattro pro) for specific savings goals: veterinary care, annual trip home, annual certification dues, retirement, school and property taxes, gifts, home repairs, new (to me) car fund - sadly the old one didn’t make it long enough for me to save up for it so I’m taking the bus and getting a lot of exercise until I do) and, of course, the big emergency fund. I’ve found that giving every penny a name makes it harder to spend. For instance, if I consider taking money out of the veterinary fund, I immediately think of my dog sick on a veterinary table, or if I think of taking money out of the trip home fund, I think of the guilt trip my mom’s going to give me.
Sorry for the lengthy message. It’s just that after about eight months of struggling, I’ve finally found a method (or combination of methods) that actually makes me feel like things are going to be okay - and it’s a huge relief.
November 17th, 2008 at 12:37 pm
I agree wholeheartedly with your posting. In school, we were taught that Goals have to be SMART - an acronym standing for Specific, Measurable, Attainable, Relevant, and Timely.
Setting SMART goals also provides concrete feedback on when you’ve attained the goal, and when you can celebrate!
November 17th, 2008 at 2:32 pm
I agree! Debt gives you a very specific number to shoot for. However, saving for an emergency fund or any other goal is more nebulous, so it helps to attach a concrete number to the goal!
November 17th, 2008 at 2:36 pm
So sounds like you need to work on a reward system… save $10,000 then splurge on some enjoyment. Save another set number and then splurge on some enjoyment…. Make those splurges, or purchases, things that you want but don’t need, but would be good rewards for having met a goal
Make the steps far enough apart that they require some work to get there, but close enough that they are attainable. Do not set yourself up for failure by having them too far apart… that would defeat the purpose.
November 17th, 2008 at 2:50 pm
Just a comment about saving for kids’ college: We never had enough money to set aside anything for our kids’ education, but made sure they took advantage of all advanced classes (public school), [free] tutoring, extracurricular activities, etc. to insure access to the better public universities. Both worked hard and were focused. They now attend prestigious -public, in state- universities and have very little debt thanks to grants, scholarships, and part time jobs. Both are planning for graduate school.
If we had stashed huge sums, we probably would not have qualified for some of the funds they received. It wasn’t intentional to NOT have a lot of savings, but the point is, if your kids are well prepared, finances will not hold them back. They may not go to Harvard, or may even have to go to a junior college for a couple of years, but SO WHAT. Prioritize yourselves, i.e., retirement, no debt, before saving for college.
Just my 2¢
November 17th, 2008 at 5:09 pm
Wow, you’re really milking this, aren’t you? LOL.
Can’t wait to read the next Tell All Tuesday!
November 17th, 2008 at 6:56 pm
Regarding some of the other ideas, such as home improvements, car, etc. I suspect you would need to decide what the specific goal is, such as “paint outside of house”, then price it out, start saving and if its going to take awhile, then account for inflation. Its the unplanned expenses that’ll send you reeling, so a hefty emergency fund (Suze says 8 months living expenses minimum) would be the obvious first priority.
Consulting a pro or books such as Suze Orman’s could be really inspiring.
November 17th, 2008 at 8:49 pm
FYI, Bankrate has several calculators which might help: http://www.bankrate.com/brm/rate/calc_home.asp
November 17th, 2008 at 10:34 pm
Just my 2c about college. My 20 year old has been going to community college on grants. She also spent 6 weeks studying abroad last summer on a scholarship. There are many ways to attend college without paying huge sums of money.
November 19th, 2008 at 2:02 am
Great article.
If you’d like a tool for setting your goals, you can use this web application:
http://www.Gtdagenda.com
You can use it to manage your goals, projects and tasks, set next actions and contexts, use checklists, schedules and a calendar.
November 19th, 2008 at 10:18 am
Yes, it’s harder to stay focused once you are debt free and into savings mode. What I did is set out the next few steps toward wealth building.
- Retirement % of gross pay to company match in 401K
- Emergency fund to 3 months cash
- Set up Roth, fund 1/4 monthly
- Start new to me car fund $x per month
- Start house fund (1% of value per year/12) each month
- E fund to 6 month’s cash (put 3 months in cd ladder)
- up Roth to half of max
ect….
By having a plan with concrete numbers (and % of pay is just as easy to work with as an actual $ amount once you get used to it), you stay focused. I track these goals on the same worksheet that I used to use to track my debts.
Also, don’t think of frugality as deprivation, it’s like the difference between a diet and a lifestyle change to health eating…..
Best of luck and congrats on your steps so far! When I paid off the mortgage, I made a copy of all the loan docs (you need to keep the originals, of course) and had a ceremonial burning in the bbq. CELEBRATE when you get your car title free and clear.