Whether you are trying to save for yourself or helping your child to start saving, these are great tips to help you through the process.
In “Trying to Save Money Step 1” we suggested that you open a savings account. This is a great place to start. Remember your chances of really putting money aside is greatly increased by putting it in a separate savings account rather than leaving the money in your general account.
The next thing to do in trying to save money is to set a goal. Goals need to be SMART which is an acronym for Specific, Measurable, Attainable, Realistic and Time related.
Specific: Ensure that you have all the descriptive qualities of the thing you are saving for and make it as specific as possible. No room for being vague…the subconscious mind likes clear instructions and your subconscious is an important factor in saving. An example would be saving $ 50,000 for a down payment on a 3 bedroom 2 bathroom bungalow within a 45 minute commute to work: Must have large fenced yard, open kitchen with stainless steel appliances and hardwood floors throughout. Perhaps it’s one of your kids and they are saving for a brand new game console: a Nintendo 3DS XL. Cost $200. Be very specific!!
Measurable: You will need to determine how much you need to save and for how long. You will also want to be able to measure your progress. For example if the game console costs $200 and your child already has $50 in his/her bank account, the amount of $150 needs to be saved. That could be $15 per month for 10 months or change the monthly amount and number of months. If you are saving for that down payment for a home then do a similar calculation.
Attainable: Ensure that your goal is practical and attainable and determine what action needs to be taken to achieve your goal.Hold off on the 10,000 square foot mansion or a red Lamborghini, and if the goal of your child is outside the family’s resources use your discretion. Many times our kids will ask for unattainable goals but that’s where you can help them to be realistic…….
Realistic: If you live in a condo, perhaps saving for a pony may be out of the question. Again, your guidance is needed to determine if your goal or child’s goal is within the resources at hand.
Time: Put a date on when you want to achieve your goal. This is important as anyone who has a tendency to procrastinate knows that any task can be put off forever. Determine a practical date to achieve your goal.
When you have set your SMART goal you will have a clear vision of what you are saving for, what action will be required to achieve your goal, how you will measure your progress, you will have ensured that your goal is within your resources and is attainable and you will have determined when you will be able to achieve your goal.
Right down your goal. Get a picture of it if possible and keep the image of what you are saving for visible to you first thing in the morning and last thing at night.
Visualization of your goal is critical!
If you need assistance in setting your goal or a goal for your child please do not hesitate to get in touch with me. My contact information is below.
Money Smarts 4 Kids