Try these tips for managing your financial priorities
Competing financial priorities can start to come at us pretty quickly once we hit adulthood. Perhaps you have student loans to repay, hear wedding bells in your future, and are currently saving for a down payment on a home. At some point you’ll want to take a much-deserved vacation and continue to save for retirement. And let’s not forget about your emergency fund. With so many money goals to chip away at, it’s easy to see why hitting a multitude of different targets can feel overwhelming.
Before you throw up your hands in frustration, or worse, fail to save altogether, there are some strategies you can incorporate into your life right now to make saving for the milestones ahead almost feel like a breeze. First up, it’s time to get strategic and apply the S.M.A.R.T. methodology to your goals.
How to set S.M.A.R.T. Goals
Here’s what we mean: When using the S.M.A.R.T. methodology, the S stands for Specific. You know you want to buy a home in the next five years, but do you know how much you will need to make that happen? If not, it’s time to get specific and figure out the amount you will need to save every month between now and then to make your goal a reality.
The M is for Measurable. It’s vital to mark your progress starting today. When it comes to financial goals, this should be the easy part. You can utilize monthly statements from your financial institutions as a tool for measuring your progress.
The A stands for Achievable. Set yourself up for success and make sure your goal is not impossible to reach. That means setting a dollar amount you can save on a monthly basis toward each goal that you know you can reach. When it starts to feel easy, you can always adjust and save more.
The R is for Relevant. Does your goal truly deserve the attention you are giving it?
Finally, the T stands for Time-bound. When, specifically, do you hope to accomplish your savings goal? When it comes to paying for college and retirement, those dates are likely already decided; though for shorter-term goals you should still set some parameters in order to hold yourself accountable.
Creating a timeline
Now, set aside some time to sit down and prioritize your goals by making a list of your short-, medium- and long-term priorities. Then it’s time to decide — with your partner if one is in the picture — which are the top two, or even three, on your list. Then, follow the S.M.A.R.T. methodology outlined above. Don’t forget to give yourself a starting date, an end date, and to set up some benchmarks to assist in tracking your savings progress along the way.
Set yourself up for success
The fastest and easiest way to successfully save for multiple goals at the same time is to automate deductions and deposits. Don’t let forgetfulness get in the way of your good intentions. You can open several different checking or savings accounts at your credit union or bank, and have designated amounts of money withdrawn from a main checking account each month and placed into the other accounts. Just make sure you move money out of the checking account you use for everyday expenses. If you can’t see it and you can’t touch it, then you can’t spend it.
Article distributed in partnership with SavvyMoney with reporting by Jean Chatzky and Casandra Andrews