Saving Strategies to Achieve Goals

Saving Strategies to Achieve Goals (1)

Greg Reid once said, “A dream written down with a DATE becomes a goal. A goal broken down into STEPS become a plan. A plan backed by ACTION makes your dreams come true.”

When I wrote about planning for success after graduation, my first step aimed at making a plan. Within this plan you have goals that are worked towards to achieve your dreams. Being a competitive swimmer for 13 years I would have gotten nowhere if I did not have goals. They kept me focused and motivated to reach the end despite the struggles I faced inbetween.

Financial planning is not possible without goals and today I will share a story that happened recently to show the power of goal setting and how they can make you financially stable.

To give you some background information, the area surrounding my university is a blue collar neighborhood. As I have done community service in the area, I know that many families live from paycheck to paycheck, like 70% of Americans. But is everybody within this community living this lifestyle? After my latest encounter I am not so sure. The person I will describe lives in this neighborhood and is a single mother. I know nothing of her financial situation but she gave an inspirational story.

It was lunch time on a Sunday evening and I was hungry so I decided to go and get food from a local Italian eatery near university. Upon ordering my food I saw that one of the cashiers had a smart watch on her hand. When I looked closer I was shocked to see that it was the Apple iWatch! In my head I questioned why would she buy such an expensive item?

Having known this person for 5 years I said, “That is a really nice watch you have there, isn’t it the Apple smart watch?” She told me that it was and we had a small conversation of how it works and whether she liked it or not. During the conversation I told her that it was too expensive for me to afford and was not sure if it was worth all that money. She laughed and told me that it was really expensive but she had been saving to buy something nice for months and figured this would be a good purchase.

To cut the story short she said that growing up in this neighborhood she never had any luxury items but always saw them being advertised on television or by some of the higher income college students on campus. She slowly put money aside each month to buy a “luxury” item and figured the iWatch was the one she wanted.

Now I am not sure if she saved her money in a bank account, through investing, or just stuffed it into an envelope under her bed. These questions were too personal to ask but no matter her choice of method, she set a goal and put money aside until she achieved it.

Yes she probably could have put her money to better use. However, it is important to remember what is special for some people are not important for others. The moral of this story is that you can achieve your goals through conservative spending habits. Whether your goal be purchasing a new house, a new car, or saving for retirement, they will all be marathons and not sprints.

However, there is one question I have with this story. I ask myself, “Did she fell into the typical consumerism trap?” Companies are promoting their products with marketing strategies that target certain emotions within our body to entice us to buying their products. If you fall into their trap you will likely be an impulse buyer which will blow your budget. Unfortunately for the lady in my story, I think she fell into the trap of consumerism which led to her spending enormous amounts of money on a piece of technology that may likely become obsolete in the coming years.

Below are some strategies to help you achieve your goals:

Set your goals into three buckets: short, medium, and long-term.

Short-term: These goals should be 1 year long. An example is a vacation. A flight to Trinidad will cost me $800 so I will need to save roughly $67 a month, before taxes, to afford this trip once a year.  Appropriate saving vehicles for these goals are saving accounts (preferably high yield), CDs or a money market account. It is important to know that while money market accounts can offer higher interest rates than saving accounts they often have higher minimum balance requirements. Also, with a CD your money is tied up for a period of time and if you withdraw your money early you will likely incur a penalty. The goal is to reduce risk and conserve capital.

Medium-term: These goals take longer than a year to achieve but usually no more than three. Examples include purchasing a car, paying for a wedding, or making a down payment on a house. You can still use a saving account, CD or a money market account for these goals as you are trying to reduce risk and conserve capital. However, I would suggest including part of the fund money in an index fund to accrue wealth quicker.

Long-term: The most common example is retirement. Retirement accounts should be invested into the market, yes millennials I know this is scary, as the length of time should eclipse the volatility in the markets. Some ways to fund your retirement account include a 401(k), a Traditional IRA and a Roth IRA. Take full advantage of your employer match for the 401(k) as it is essentially free money. One major difference between a Traditional IRA and a Roth IRA is when your money is taxed. There is a no right or wrong method so choose what suits you.

Other related points:

In order to achieve any of these goals you should have them written down and factored into your budget. If you want to learn how to create a budget you can check out this article. You should also have an emergency fund set up before pursuing goals to ensure you are prepared for any curve balls life may throw at you. These are typically 3-6 months of your salary.

What are some goals you have set? Do you think the saving methods mentioned above are appropriate for goal setting? What other ways do you save for goals?

There will be no post this Wednesday as my CPA exam is in 10 days so I will be studying. See you all Sunday.

44 comments… add one
  • Jessica May 29, 2016, 4:01 pm

    Great post you have here! I have to have goals otherwise I never get anything done. Writing them down also makes it easier to remember. I’ve actually included this as part of a monthly feature I do on the best its from across the web. Thanks for sharing!

    • Stefan Sharpe May 30, 2016, 9:11 pm

      Thanks for stopping by Jessica. Goals are what drives us so I feel the same way as you! I was going to include writing them down but people use technology in so many ways I thought it best to let people do whatever method they choose. Appreciate the share!

  • The Green Swan May 30, 2016, 1:02 am

    Good pointers on planning and Reid’s quote is one of my favorites. Good luck on the exam!

    • Stefan Sharpe May 30, 2016, 9:12 pm

      Thanks GS I need it!

  • Latoya @ Life and a Budget May 30, 2016, 9:58 pm

    You’ve made some great points here! I think the saddest part of the story you mrationed is that the lady really didn’t know what she was saving for, she just settled for the watch because she thought it would be nice to have. I don’t see anthing wrong with saving for luxury items, but I do see something wrong with being swayed into wanting an item because of how everyone else spends their money.

  • Apathy Ends May 30, 2016, 11:54 pm

    Good luck on your exam!

    I primarily set goals for the year – but need to start setting some longer goals – primarily an official early retirement date and an amount to make that happen
    Apathy Ends recently posted…An Honest Conversation About Salary ExpectationsMy Profile

    • Stefan Sharpe Jun 1, 2016, 7:50 pm

      Thanks AE. The longer goals are always the hardest as the light is so far away!

  • Andrew Rocco May 31, 2016, 2:12 am

    Goal setting is absolutely critical when it comes to saving. It’s important to set smaller, more easily attainable goals to have a “quick win.” The feeling of a quick win reinforces the saving behavior and makes it harder to hit those bigger goals that take longer. I’m applying the same “quick win” strategy to my new blog.

    • Andrew Rocco May 31, 2016, 2:13 am

      Oh no! Typo! I meant to say that the feeling of a quick win reinforces the saving behavior and makes it EASIER to hit those bigger goals that take longer.

      • Stefan Sharpe Jun 1, 2016, 7:50 pm

        Hey Andrew thanks for stopping in. The quick win strategy works and should be used for longer term goals. Something as simple as feeling accomplished for depositing $500 towards retirement is an achievement in itself.

  • Rhonda Swan May 31, 2016, 2:36 am

    Great thoughts here. Keep up the great work and live unstoppable!
    Rhonda Swan recently posted…How to Create a Valuable Blog For Your BusinessMy Profile

  • Dividend Diplomats May 31, 2016, 2:37 am

    Great post Stefan! Goals are a huge step in the process and guide you to reaching your endpoint versus having you aimlessly wander in any direction. I like what the cashier did regardless of her financial situation. Could she have spent her money better…probably. But as you said, each person values things differently. What I admire is that she didn’t take the easy route of purchasing the watch on a credit card and figuring out how to pay for it later. Instead, she worked, saved, and waited until she had enough money set aside where she was financially comfortable with making the decision. Sounds like her short term goal was to save enough for the apple watch.

    Thanks for taking the time to share your experiences and story with us. Stories like these always get me excited!

    Bert
    Dividend Diplomats recently posted…Lanny’s May Dividend Income SummaryMy Profile

    • Stefan Sharpe Jun 1, 2016, 7:51 pm

      I was very surprised by her story myself, I was expecting another swipe of the credit card to have happened. Glad to provide some excitement, looking forward to the income reports (that gets me motivated and excited!).

  • FinanceSuperhero May 31, 2016, 3:11 pm

    Your story about the girl and the Apple Watch really resonated with me. For some reason, I, too, often encounter individuals who overspend on the latest gadgets. I know one colleague who is single, and while she makes over $120,000 per year, she needlessly owns three vehicles. I think she would wise up if she had a greater understanding of the savings strategies you outlined.

    Unfortunately, if you aim at nothing, you’ll probably hit it everytime.

    • Stefan Sharpe Jun 1, 2016, 7:52 pm

      Three vehicles? Unless there are traffic laws I don’t see the need haha. You should have a talk with her ;).

  • Nellwyn May 31, 2016, 7:56 pm

    Diving goals into short, medium, and long term is a great idea. I have monthly savings goals which work well for me, but right now I haven’t quite figured out how to keep for the long term and how much can be used in the short term.

    Nellwyn | http://www.thecardinalpress.com

    • Stefan Sharpe Jun 1, 2016, 7:53 pm

      You should implement a reward system to keep you motivated for the longer goals! Either a treat or something you find enjoyable will be good.

  • Kim @ Three Olives Branch May 31, 2016, 8:39 pm

    Great points! I love how simple and straight forward it is. There are so many options out there, it is easy to be overwhelmed and difficult to find financial advisers that you can trust

    • Stefan Sharpe Jun 1, 2016, 7:54 pm

      Appreciate it Kim. Trust is hard to come by in a profit motivated world.

  • Financial Slacker May 31, 2016, 9:27 pm

    I am a big believer in writing down your goals. Not only that, I keep them posted on my bathroom cabinet so I can look at them every single morning.

    As far as the iWatch lady, maybe she’ll use the purchase as incenitive to push herself to make more money.

    Good luck on the CPA!
    Financial Slacker recently posted…Strong Support System BenefitsMy Profile

    • Stefan Sharpe Jun 1, 2016, 7:54 pm

      Thanks FS, I need it. Writing down goals is always best but never heard of placing them in the bathroom, genius idea!

  • Emilee May 31, 2016, 10:09 pm

    Great advice! I think it’s extremely important to set financial goals while we’re young so that we are able to live the way we want to.

  • Kelsea Sullivan May 31, 2016, 10:19 pm

    Goal setting for anything is critical if you want to achieve your goals. If you have something driving you to reach your goals instead of some random idea, you’re more likely to reach your goals. Love this!

    • Stefan Sharpe Jun 1, 2016, 7:56 pm

      Always need to have a goal to achieve anything in life. Wandering around hoping things fall into place will land you in debt!

  • Christine @ The (mostly) Simple Life May 31, 2016, 11:12 pm

    I’m trying to get better at saving for longer-term goals. We want to save up for a house on a lake.
    Christine @ The (mostly) Simple Life recently posted…Chicken Taco QuesadillasMy Profile

    • Stefan Sharpe Jun 1, 2016, 7:57 pm

      Create an account and set monthly donation goals!

  • Shakirah Iman Jun 1, 2016, 1:32 am

    Love this! Some of this information was new to me.
    Shakirah Iman recently posted…College Life as a Single Mother: A Single Mother With a Plan.My Profile

  • Amanda @ centsiblyrich Jun 1, 2016, 3:54 am

    I love goals – writing them down and using actionable steps to reach them works. Accountability is a big factor as well – those who report progress on a regular basis in one way or another ( to a friend, chart, social media, blog) are much more likely to reach them than those who haven’t created accountability. Thanks for sharing your story.

    • Stefan Sharpe Jun 1, 2016, 7:58 pm

      Accountability is a big one! I would also add perseverance as it can be very hard to keep on a set path for years.

  • Darci Jun 1, 2016, 4:15 am

    I’m great at goal setting in every area of my life except finances. Wth?! This is a great post and it really has me thinking that I need to get over it and start being as deliberate with my finances as I am with everything else.

    • Stefan Sharpe Jun 1, 2016, 7:59 pm

      I would strongly urge you to get those goals going! It is one of the most important areas to have goals and you would not regret it later in life when you are sitting on a beach enjoying life and your friends are busy working 🙂

  • Dividendsdownunder Jun 1, 2016, 6:02 am

    Hey buddy, I enjoyed reading this topic. Good luck with your exam 🙂

    Our short term goal is to become pregnant through IVF
    Our medium goal is for us to create a home-earning situation – no commuting etc. I’ll be doing exactly what I want to.
    Our long term goal is financial independence, for our investment income to cover our expenses. Then we can do whatever we want for the rest of our lives.

    Tristan
    Dividendsdownunder recently posted…Is ‘better’ ever worth paying more for?My Profile

    • Stefan Sharpe Jun 1, 2016, 8:00 pm

      Appreciate it Tristan. Great goals you have and hoping for the best on the next IVF. It will be exciting when your passive income can cover your bills!

  • Michelle Jun 1, 2016, 2:34 pm

    Good luck with your exam! I believe that setting different time periods for goals is extremely important. For us, we try to save as much money as we can, because you just never know what will happen in the future. We really want early retirement!
    Michelle recently posted…Are These Bad Money Habits Making You Broke?My Profile

    • Stefan Sharpe Jun 1, 2016, 8:01 pm

      Thanks Michelle! From the looks of your blog and your switch to an RV I am sure you will reach FIRE sooner rather than later. Looking forward to reading about your upcoming journeys.

  • Brandy Jun 1, 2016, 9:22 pm

    This is an awesome topic to cover, goals have to be achievable too 😉 I Love having mini goals, it feels good to get them accomplished!

  • Francesca - From Pennies to Pounds Jun 1, 2016, 9:55 pm

    Love anything to do with goals 🙂

    Good luck for your exam! Was it today? Hope it went well if so.

  • kali Jun 1, 2016, 11:22 pm

    wonderful post. all good things
    Xx
    Kali
    http://www.lovelaughexplore.com
    @love_laugh_explore
    https://www.facebook.com/lovelaughexplore/

  • Melanie Jun 2, 2016, 3:12 am

    I’m good at the short term saving but not at the long term ones. I need to work on that. I currently have no money for retirement but that’s about to change. Good post 🙂

  • David @ Thinking Thrifty Jun 2, 2016, 10:10 am

    Great post! I was stuck in a rut for years until I set myself some firm goals. Unsurprisingly, since I formed a clear plan my life has completely changed!
    David @ Thinking Thrifty recently posted…5 Things You Must Do To Teach Your Child About FinanceMy Profile

  • Sam Jun 2, 2016, 11:07 pm

    Thanks for sharing this with us. I really like the idea of monthly donation goals, especially when it comes to vacation.

  • Investment Hunting Jun 4, 2016, 4:46 am

    That’s a great opening quote and so true. Very inspirational. I write my annual goals on my blog every year, then I print them out and post them a few places where I am forced to see them everyday.
    Investment Hunting recently posted…Monthly Dividend Income – May 2016My Profile

Leave a Comment

CommentLuv badge