AJ: My ability to save really shines when I have a specific goal in mind over and above our everyday saving. Once you have a budget that appropriately matches what you should be spending in each category monthly, saving isn’t a pressure point anymore. If you’re just getting your saving sea legs, start with one goal in mind – a new watch, an expensive purse, a road trip to a friend’s house, or something you really need, like a car seat.
Two places I always cut from when we have a goal are our food budget and our shopping budget. We have a well-stocked freezer and pantry so when need be, I plan meals that wont require me to purchase many extras, and we eat out less. I closely track how much we need to cut weekly and often times we wind up cutting even more than I had hoped because I always over plan for the cost of groceries and under spend. Take the time to make a grocery list and look through the sale ads. I rarely go to more than one store a week unless there is something I just can’t pass up at another store, but I do pre-load coupons to my card and track when items are on sale. When I started planning my list based on exactly what we needed for that week and how much I thought it should cost, our overall grocery bills went down significantly. I still have to pre-plan for jumbo packs of toilet paper, paper towels, laundry detergent at CostCo, etc, but I just plan around that by using more of what we already have.
Saving for the little things doesn’t get me quite as excited as saving for the big things, though. There is something so gratifying about saving for a new car and paying for it in cash or saving for the trip of a lifetime. It’s not just a light at the end of the tunnel, it’s happiness and relief, and every drink tastes better when you know you already have enough saved up to pay for the entire trip. Dont ruin a vacation by putting everything on a credit card. If you can’t afford it, don’t take it. Scale back, plan properly, and pay it all off. Kirby and I love a fancy meal, but we’ll eat dirty water hotdogs from the street for lunch to make it all work. Life is a beautiful series of decisions, and sometimes decisions mean eating dirty water hotdogs in between five-course meals.
KJ: If you don’t know what you are saving for, then what is the point of saving? Keep your goals front of mind (whether they’re completely practical like ‘I need a new pair of running shoes because I have had this pair for five years’ or they can be less than practical). Stick to three goals or less at one time, whether it’s:
1) Establish an emergency fund
2) Save for college for a child
3) Save for retirement
1) Purchase a car
2) Save for a home downpayment
3) Save for retirement
As you accomplish your goals, you are able to add new ones, but the key to accomplishing them is to start small and focus on the end goal. If you are able to track progress toward goals within one account, then by all means do that. Mint.com has a great system to be able to set up goals and track progress over time (especially if it’s a multi-month or multi-year type of goal). Consider splitting your goals into separate ‘buckets’ for different saving accounts. That can help you keep up with how much you have for each goal, but the downside is having more accounts to track, more transfers, etc. A good old-fashioned spreadsheet can be a great tool (my personal preference) to track your ‘balances’ of different goals within an account too. I already have enough accounts with IRAs, 401(k)s, HSA, savings, etc. that I really don’t need (and my wife wouldn’t let me) get any more than absolutely necessary…
Saving for goals is hardly sacrificing. It’s honing in on what is important to you, and cutting out the fluff that’s not. I would much rather save up for a fancy trip and cut out my dining out for lunch than to overspend on lunch and miss out on that trip.
AJ: This is one area where Kirby and I really rock as a couple. When we both get behind something, we truly achieve what seem like enormous goals really quickly. I feel really proud when we accomplish a goal, help someone who needs it, or build for our future.
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