Not Made Of Money

Setting savings goals is an important step in any family’s financial plans. However, just as important is the act of setting realistic savings goals. I can set any goal I’d like, but if the goal isn’t attainable the only thing I’m going to achieve is frustration. A goal that I can reach, though, will leave me feeling victorious and ready to tackle another goal.

So, how do you choose goals that are attainable? While there are no hard and fast rules to decide if your goal is reasonable, there are a few tricks you can use to evaluate yours.

Compare your goal to your previous goal. Maybe you vowed to save $100 each month in order to pay for a family vacation last year. Did you achieve that goal? Was it easy to achieve? If you struggled to save $100 from your monthly budget last year, a goal to save $250 from your monthly budget this year may not be reasonable.

Evaluate whether the goal fits into your budget. I’m a big advocate of having a written budget, so it shouldn’t surprise you that I’m telling you to use your budget to evaluate your savings goal. If you’ve already planned for every dollar in your budget, you’ve already determined how much you’ll be saving each month. Saving more than that pre-determined amount is possible, but you’ll need to figure out what part of your budget you’re going to cut to make that savings happen.

Keep an eye on your progress. Setbacks happen to every family, so your savings plans will need to be updated along the way. For instance, if your goal is to buy a new refrigerator at the end of the year, you may start out thinking that you need to save $100/month. Then, your car breaks down, and you have to spend $300 from your savings account to get the car repaired. You’ll need to adjust your monthly savings contribution to achieve your goal at the end of the year.

Achieving your savings goals is a sure sign of a financial plan that is functioning well. Each time you meet one of your goals, you should take care to set a new goal, one that is slightly tougher to achieve than your last one. As you continue achieving your goals, you’ll find that your confidence grows and you become better at setting goals. What a great feeling!

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