Savings Strategies: Part 1
Do you cringe when you hear the words “New Year’s resolution or do you embrace it?” Either way, you are not alone. Almost half of all Americans make a resolution at the beginning of every year. Most resolutions, however, are centered around healthy eating and physical wellness, but it’s important that we don’t forget about our financial wellness. Making a commitment to improve your financial wellness is a great way to start the new year. Here are three simple steps to get you started – assess, analyze and plan.
Assess your situation
- Do you have an emergency fund of at least $500?
- Do you save 10 percent of your income for retirement or other savings?
- Do you spend less than 20 percent of your monthly income on debt?
- Do you spend less than 5 percent of your monthly income on clothing for yourself and your family?
- Do you spend less than 10 percent of your monthly income on food and personal care items?
- Do you spend less than 20 percent of monthly income on transportation costs, including car maintenance?
If you answered no to any of these questions, then these are areas for you to work on.
Analyze your circumstances
- Are you able to cover your financial obligations?
- Are you worried when you have major spending decisions to make?
- Do you have a savings for non-essential spending?
- Do you have financial goals?
- Are your current spending habits helping you achieve your financial goals?
- What is your definition of financial security?
Be honest with yourself and get to the heart of your financial matters.
Develop a Savings Plan
- Are you currently saving?
- Are you happy with the amount that you are saving?
- Are you spending money carelessly?
- Do your current saving habits limit your goals?
- Do you want to start saving?
- Do you want to set goals to improve your savings?
Make a SMART Goal
Making SMART saving goals will give you an outline or plan on how to save money and achieve your financial goals.
- S: Specific – Be very specific in describing what you want to achieve. Set a monthly saving goal.
- M: Measurable – Decide how much money you want to save, how often and how you will track your progress.
- A: Attainable – Make your goals attainable by basing them on your current salary.
- R: Relevant – Your goals should be relevant to your current situation.
- T: Timely – Choose a deadline for your goal or a date that you would like to complete your goal.
Be flexible and understand that adjustment can be made to any step in the process. If your goals are too easy or too difficult, adjust them accordingly. Finally, find an accountability partner that will help you stay on track and stick to your goals.
America Saves can help you reach your savings goal. Check out this link for more information and take the pledge https://americasaves.org/for-savers