Being able to set SMART financial goals is crucial to achieving long-term success. This on-demand webinar teaches you how to set savings goals and how to prioritize savings goals within your budget. Learning these skills will make it easier to make progress so you can reach key milestones in your life faster. It can also help you avoid debt.
Thank you for joining us for Achieving Your Savings Goals, your guide to SMART savings.
Our mission is to assist families throughout the United States in ending financial crisis, and solving money management problems through education and professional counseling.
I am so glad that you are attending this webinar because this is a very important topic that many of us neglect to address. What are savings and why are they important? Savings is the portion of income not spent and that you put away to use at a later time. Methods of saving include putting money aside in a deposit account, pension account, an investment fund or as cash under your mattress, which isn’t as safe as the others mentioned. It is important because none of us know what will happen in the future. Money should be saved to pay for the unexpected events that come along, such as car repairs, medical emergencies etc. Money can also be saved for a large purchase or perhaps a vacation.
Specific: A specific goal has a much greater chance of being accomplished than a general goal. To set a specific goal you must answer the six “W” questions:
*Who: Who is involved?
*What: What do I want to accomplish?
*Where: Identify a location.
*When: Establish a time frame.
*Which: Identify requirements and constraints.
*Why: Specific reasons, purpose or benefits of accomplishing the goal.
EXAMPLE: A general goal would be, “Get in shape.” But a specific goal would say, “Join a health club and workout 3 days a week.”
Measurable – Establish concrete criteria for measuring progress toward the attainment of each goal you set.
When you measure your progress, you stay on track, reach your target dates, and experience the exhilaration of achievement that spurs you on to continued effort required to reach your goal.
To determine if your goal is measurable, ask questions such as……
How much? How many?
How will I know when it is accomplished?
Achievable – When you identify goals that are most important to you, you begin to figure out ways you can make them come true. You develop the attitudes, abilities, skills, and financial capacity to reach them. You begin seeing previously overlooked opportunities to bring yourself closer to the achievement of your goals.
You can attain most any goal you set when you plan your steps wisely and establish a time frame that allows you to carry out those steps. Goals that may have seemed far away and out of reach eventually move closer and become attainable, not because your goals shrink, but because you grow and expand to match them. When you list your goals you build your self-image. You see yourself as worthy of these goals, and develop the traits and personality that allow you to possess them.
Realistic- To be realistic, a goal must represent an objective toward which you are both willing and able to work. A goal can be both high and realistic; you are the only one who can decide just how high your goal should be. But be sure that every goal represents substantial progress.
A high goal is frequently easier to reach than a low one because a low goal exerts low motivational force. Some of the hardest jobs you ever accomplished actually seem easy simply because they were a labor of love.
Timely – A goal should be grounded within a time frame. With no time frame tied to it there’s no sense of urgency. If you want to lose 10 lbs, when do you want to lose it by? “Someday” won’t work. But if you anchor it within a timeframe, “by May 1st”, then you’ve set your unconscious mind into motion to begin working on the goal.
Your goal is probably realistic if you truly believe that it can be accomplished. Additional ways to know if your goal is realistic is to determine if you have accomplished anything similar in the past or ask yourself what conditions would have to exist to accomplish this goal.
Savings goals can be anything a down payment for a home, paying for college, a new car etc. Once you have your goal planned out, then you can figure out how much and how long it will take. There are goal tracking worksheets available online, but I have also included one in the handouts section. If you check your menu bar on the side, you will see a goal tracking worksheet. It breaks down what your short, medium and long term goals are, the estimated cost, date to achieve and how much you will need to save per week or month. Remember the SMART goals from the previous slide. Regardless of what life stage you are in, you are likely to have some short and long term personal financial goals. Setting tangible and realistic goals, following them, and tracking your progress is the key to success in achieving them.
If you are married or have a significant other, it is absolutely essential that you and your spouse both share the same financial goals. Otherwise, them is almost impossible. Develop your plans together, and review your progress together to make sure both of you are contributing to the same goals.
Deciding what your short-term, mid-term, and long-term personal financial goals are is the first step. Some common goals are a dream vacation, a new home, college savings, retirement savings, and an emergency fund. Once you and your spouse have agreed on them, the next step is to determine a good estimate for how much money you’ll need for each of them. In order to achieve your goals, you will need to have a budget in place to get there. I will discuss budgeting in the next few slides.
- Include the whole family
- Pay yourself first
- Decide what your goals are
- Pay down debt
- Include savings reserves
- Keep good records
The next time you’re tempted to buy something, stop and think about the following:
- Do I really need this item?
- Is it worth all the time I spent making the money to pay for it?
- Can I use my money in a better way right now?
- Do I really need to buy the priciest item or will a lower-cost item serve me just as well?
- Can I really afford this right now?
- Will the item be on sale soon? Should I wait?
- Do I really need a name brand item, or will a store brand serve my purposes—and save me money?
- What do consumer magazines say about the item I’m considering?
- Do I know anyone who already owns this item? Do they think it was worthwhile to buy or do they regret their purchase?
Treat yourself, but use it as an opportunity to save. Match the cost of your nonessential indulgences in savings. So, for example, if you splurge on a smoothie while out running errands, put the same amount into your savings account. And think of it this way, if you can’t afford to save the matching amount, you can’t afford the treat either.
Calculate purchases by hours worked instead of cost. Take the amount of the item you’re considering purchasing and divide it by your hourly wage. If it’s a $50 pair of shoes and you make $10 an hour, ask yourself if those shoes are really worth five long hours of work.
Aim for short-term savings goals. Make a goal such as setting aside $20 a week or month, rather than a longer term savings goal. People save more successfully when they keep short-term goals in sight.
Establish your budget. Are you looking for an easy way to begin? On the first day of a new month, get a receipt for everything you purchase. Stack the receipts into categories like restaurants, groceries, and personal care. At the end of the month you will be able to clearly see where your money is going.
Budget with cash and envelopes. If you have trouble with overspending, try the envelope budget system where you use a set amount of cash for most spending. And once the cash is gone, it’s gone.
Don’t just save money, save. There’s a difference between saving money and saving money for your future. So don’t just spend less, put the money you save into a savings account to plan for college expenses, retirement, or emergencies that can leave you financially better off.
Use the 24 hour rule. This rules helps avoid purchasing expensive or unnecessary items on impulse. Think over each nonessential purchase for at least 24 hours. This is particularly easy to do while shopping online, because you can add items to your cart or wish list and come back to them a day later.
- Pay yourself first – Payroll deduction is one of the best ways to save for those who struggle with it. With this approach, you will have the money automatically taken from your paycheck and transferred to a savings or retirement account.
- Set up automatic transfers – Check with your bank or credit union about how to do automatic transfers from your checking to savings. This is another way of paying yourself first. This is also good if you happen to be taking advantage of a high yield online savings account. Please remember that this is mainly a one way transfer, unless it is an emergency.
- Round up your savings – Some financial institutions will round up your debit card purchases. For example, Bank of America will round up to the next dollar amount and put the change into your savings account.
- Bank your discounts – If you happen to save money on your groceries or shopping, because of coupons etc. Put that money into your savings account.
- Save your change – Loose change adds up. Keep it in a jar or piggy bank and you’ll be amazed by how much it adds up.
What are emergency savings? This is money put aside for just that, an emergency. It is recommended that you have at least 3 to 6 months of living expenses in a savings account. Think of this as a type of insurance, in case you happen to lose your job. You should first calculate what your living expenses are. Tally up how much you spend each month on mortgage or rent, utility bills, groceries and vehicle expenses. You should have at least enough to cover your living expenses for three months, and probably even more. You should always create a list of acceptable expenses that this money has been designated for.
Ensure that they are true emergencies – things like covering your living costs during periods of unemployment, medical emergencies, paying for repairs to your home that occur as a result of a natural disaster or fire, emergency veterinarian bills, unforeseen vehicle repairs, or even tax bills that were unexpected. The whole point of this fund is to prevent you from having to add to your debt in times of need or scrambling to wrangle up the money at the last minute. You definitely want to ensure that this money is safely stowed in your account for those occasions when you need it.
There may be times when it will be tempting to use this money toward a vacation, paying off significant debts, putting a down payment on a new home or any other significant expense that arises. For those who have had unforeseen expenses can tell you how happy they were that they had funds available, but for those who didn’t they will tell you the opposite. They would probably let you know how hard it was to come up with the money needed to get by. They also probably had to depend on high interest credit cards or short term loans to get by. Having an emergency fund can keep your stress levels down, by knowing that in case anything happens you will be covered.
Type of Product: SAVINGS ACCOUNT (bank); SHARE ACCOUNT (credit union)
Minimum Initial Deposit is Usually $25-100 but make certain monthly fees are not charged for small balances Yield – Usually .2-.5% Safety – Government-insured*
Access to Funds – Immediate Where to Purchase – At any bank, thrift, or credit union How to Purchase – In person, online, or by phone How to Make Deposits – Through tellers, ATMs, or automatic monthly transfer from checking account Other Features – At many institutions, minimum balance of $100-500 is required to avoid monthly fees or automatic transfers of $5 – $25 a month.
Type of Product: Online Savings Account
Minimum Initial Deposit – As low as $1 at some institutions Yield – Usually 1-2% Safety – Government-insured* Access to Funds – Immediate
Where to Purchase – At any bank, thrift, or credit union How to Purchase – In person, online, or by phone How to Make Deposits – By transferring money from a checking account, or through direct deposit. Other Features – Confirm that the online institution is insured.
Type of Product: CERTIFICATE OF DEPOSIT (bank); SHARE CERTIFICATE (credit union)
Minimum Initial Deposit – At most institutions, at least $500 Yield – Usually 1-2% Safety – Government-insured* Access to Funds – Immediate but interest penalty
Where to Purchase – At any bank, thrift, online or credit union How to Purchase – In person, online, or by phone Other Features – Certain financial institution will notify you when CD matures
Type of Product: U.S. SAVINGS BOND, SERIES EE
Minimum Initial Deposit – As low as $25 ($50 for payroll deduction) Yield – Usually 1.5% Safety – Government-guaranteed Access to Funds – After first 12 months, immediate access but loss of 3 months interest Where to Purchase – From the U.S. Treasury How to Purchase – Through www.treasurydirect.gov – where savers can buy electronic (no paper) savings bonds with checking account deductions, 24/7. How to Make Deposits – www.treasurydirect.gov allows periodic deposit or checking account deductions to purchase bonds. Other Features – Must cash in after 30 years or no more interest earned; face value of bond twice the purchase price ($50 bond costs $25)
Type of Product: U.S. SAVINGS BOND, SERIES I (with inflation protection)
Minimum Initial Deposit – As low as $25 Yield – Usually 0-2% Safety – Government-guaranteed Access to Funds – After first 12 months, immediate access but loss of 3 months interest Where to Purchase – Through www.treasurydirect.gov – where savers can buy electronic (no paper) savings bonds with checking account deductions, 24/7. How to Purchase – Through www.treasurydirect.gov – where savers can buy electronic (no paper) savings bonds with checking account deductions, 24/7. How to Make Deposits – EASY SAVER program allows periodic payroll deposit or checking account deductions to purchase bonds Other Features – Must cash in after 30 years or no more interest earned.
Type of Product: Money Market Account
Minimum Initial Deposit – As low as $250 at some institutions Yield – Usually .1-.3% Safety – Government-insured* Access to Funds – Immediate
Where to Purchase – In person, online, or by phone How to Purchase – Money
Please check out our website for interactive calculators, ask the expert tips, downloadable booklets and videos.
Knowledge of Financial Education (KOFE) is a financial educational program created by Consolidated Credit for employers to offer to their employees.
KOFE will help employees to master their money with user friendly tools and resources. From the online portal, to live webinars, and a dedicated team of professional financial coaches, employees will have access to ongoing education and support. For more information please email [email protected]
I would just like to thank you all again for attending this webinar and I hope that you found it to be very informative. Please do not forget that immediately following the close of the webinar, there will be a survey and about an hour after the questionnaire will be emailed to you. Please check you junk/spam folder to see if it there. Once that is completed and returned the notes will be sent to you. I have also included a list of the credit rights in the notes for your review. Thanks again for joining us today and have a wonderful rest of your day!
Want to learn more about setting savings goals?
Consolidated Credit offers tons of free resources that can teach you how to set a goal and save money to reach it. We also have a free tool that can help you find the most effective place to keep money you save. The more you can learn and understand effective saving strategies, the easier it will be to achieve your goals!
We’ve dedicated an entire section of our website to teaching you how to save money. Learn how to find extra money for savings in your budget and how to achieve better growth. With the right strategy, you can build net worth and achieve your goals in a snap!
How to Save Money Everyday
Learn how to be Penny Wise and not Pound Foolish when it comes to saving money. This video teaches you where to find extra savings in your budget to increase cash flow so you can reach your goals faster.
Ever hear the adage of penny wise and pound foolish? It refers to being good with small amounts of money, but missing the mark on the big stuff. We think you can do both!
By focusing on the small things to save a few dollars here and there, and avoiding big expense-drainers that often lead to debt, you can avoid challenges and improve your situation in a snap!
Let’s start with penny wise and pound foolish when it comes to food. When you’re pound foolish you dine out whenever you want and get a cappuccino to start each workday. As a result, your family of four spends $3,000 eating out every year and you spend $1,300 each year on your morning cup of Joe.
To be penny wise, limit prepared meals – from restaurants and fast food as well as take-out and delivery. You make meal plans for the week to match up ingredients, and you shop with coupons and use in-store offers. Then once you’re in the kitchen you cook more than you need for a family meal, so you can freeze leftovers and have easy re-heatable meals on days when you don’t feel like cooking.
Your appliances are penny wise too, because you check Consumer Reports for price and energy use. Then when you purchase a new appliance, you check three to four retailers to find the best deals. And you don’t turn around to be pound foolish by using energy-efficient appliances half full, which increases consumption.
When you’re penny wise you also take steps to keep your bills low. You get a home energy audit, turn off lights and ceiling fans when you leave a room, and set thermostats smartly to cut your electric bills. And you avoid being pound foolish by paying a flat rate for unlimited mobile service if a measured service plan would cost less. Penny wise people also cut options on home phone and internet to save up to $40 per year for each option dropped.
These are just a few examples of how you can take action to be penny wise and avoid being pound foolish. Other videos in this series go into more detail, so use them all wisely to make your dollars stretch as far as possible! For more great money-saving advice, visit ConsolidatedCredit.org.