What are you saving for?
This is something I ask potential clients during a complimentary call and often times they reply, “I actually don’t know.”
When I dig a little deeper, folks may share that they’re saving because they know “it’s what they’re supposed to do”. Others let me into the emotional side of their relationship with money and tell me they’re saving out of fear that is rooted in a past financial experience like bankruptcy, homelessness, or scarcity experienced during their own childhood.
Although those things may be personally true, I would invite you to get clear on what you’re saving for. Saving for the sake of saving may be a good practice but saving is so much easier when it’s tied to a financial goal or a financial value. When I work with clients, I present the opportunity for us to work together to get clear on the purpose of our savings.
Here are three helpful ways you can gain clarity with your savings:
Set a clear intention for your savings by identifying whether you’re saving for emergencies, short term, or long term expenses.
When I first started saving I was saving just to save because I knew I needed money for a rainy day and I wanted to build the habit but then I decided to be more purposeful with my savings. Now, my reason for saving is purpose-driven so I’m creating stowing away the funds for home emergencies and taking care of unexpected costs like car repairs. Some of my short term goals have included auto maintenance, travel, car maintenance, birthdays, and weddings. My long term savings goals have included a down payment for a home and a new car fund. You could also include retirement in this buck as well!
Identify a dollar amount you’ll need to satisfy your savings goals.
When I started saving for my emergency fund I knew that I would need at $4000 to cover a month of expenses so my three-month emergency fund goal was $12,000 and my six-month emergency fund goal was $24,000.
Mark your starting point so you know the gap between where you’re starting and where you want to go.
So, let’s say I started with $10,000 in savings and my goal was to save $12,000 to cover three months of an emergency fund. I would calculate my gap ($12,000 – $10,000 = $2000) to determine how much I needed to reach my goal and plan accordingly.
Set aside some time today to gain clarity about your savings so that you can start to move beyond the habit of saving and start aligning your savings with your financial goals and habits.
I invite you to pick at least just one of three things I’ve listed above and take action.
Then ask yourself, how could I be saving more intentionally so I can achieve my goals?
And if you’d like my help answering that question, schedule a complimentary call so that we can chat about how we can create a spending plan that will help you maximize your savings and minimize your spending.