Money in the Bank – Saving for Short- and Long-Term Goals

Money in the Bank
Get a grip on your finances by learning how to save for short- and long-term goals.
Written by Maresa Giovannini.

Do you feel like you are always one financial step behind the curve? If saving for the future isn’t your forte, there’s no time like the present to start developing new habits. Consider the following strategies from financial gurus and smart savers to guide you through saving money for the immediate future and beyond.  

The Basics
Start with mastering your budget. Take note of your take-home pay and regular bills, and then account for the rest of your disposable income accordingly. If you don’t have a clear budget already, this exercise will open your eyes to where your money goes—or leave you wondering. From there, focus on developing one new area of savings per month. Breaking your action items into bite-size monthly goals is less overwhelming and easier to implement than revamping all your spending habits at once.

Saving for Today
If short-term saving is your goal, put your budget on a detox diet. Jean Chatzky, author and financial editor for NBC’s Today Show, suggests saving for a vacation by determining your total budget for the getaway (including food, parking, and entrance fees) and dividing it by the number of weeks or months you have to save. Then consider suspending a health-club membership, cable service, or other dues for a couple of months and put the extra cash toward your short-term savings. If you can’t abandon services such as cable or Internet, renegotiate your service; it takes only a quick call and a bit of hardball.

Always take advantage of opportunities to get money back on items that are no longer in use. Bring gently used items to consignment stores or sell a pair of season tickets to a sporting event you can’t attend. Because that money has already been spent, any cash back would do well to go into your savings. If you pick up any extra work, pretend that income doesn’t exist. After taxes and retirement deductions, set the rest aside in your short-term savings account for a particular event. Similarly, if you earn extra money through online sales, set up PayPal payments to go directly into a savings account and divvy it up from there.

Saving for Tomorrow
Saving for the immediate future is doable for most budgets and personality types, but stashing cash away for the long run is often another story. Start by assessing your taxes. Invest in a professional for tax assistance and preparation so you don’t miss a single deduction; spend a little now to save more in the long run. Chatzky suggests changing your monthly withholding amount if appropriate. If you consistently receive a tax refund, withholding slightly less will mean access to more money throughout the year and more earned interest while it sits in an account. If you aren’t currently earning interest on your checking and savings accounts, explore your options at other banks or local credit unions.

In Fight for Your Money: How to Stop Getting Ripped Off and Save a Fortune, author David Bach recommends contributing an hour of your income per day (12.5%) toward your 401(k). If you can’t afford to part with that much, start with an hour of income per week to get in the habit. Making general budget changes to your lifestyle will also help you save for the long haul. Enjoy the finer things that are important to you, but be thrifty where you’re not particular. Regularly ask for appropriate discounts and price adjustments. If a company offers an online promotion, ask for it in the store. If a shipment didn’t arrive on time, ask to be credited back the shipping costs. Whenever you receive a refund or an impressive discount, put those few extra dollars away. If you’re consistent, the savings will add up quickly.

Starting Small
Whether you are strapped for cash on a monthly basis or just find it difficult to save, start small; minor changes can make a major difference. Employ some of the following simple suggestions to grow your piggy bank without making drastic changes to your lifestyle.

1. At the end of the day, drop your spare change into a jar. If you rely on plastic, ask if your bank offers a similar option for debit-card purchases. The program rounds up each purchase to the nearest dollar and stashes the extra pennies in a savings account.

2. If you are accustomed to buying expensive lattes on a regular basis, start by swapping syrups for free honey or sugar or purchasing black coffee and dressing it up with cream and sugar.

3. Instead of meeting friends at a restaurant for dinner, occasionally invite them to your home for a potluck so everyone contributes and saves!

Teaching Children to Save
Start children on the path to successful saving by teaching them early. Encourage your kids to save part of their allowances and offer to match what they put aside when saving for a special item or event. Moonjar, a company working to inspire financial literacy in children and families, touts a three-part piggy-bank product that teaches kids to save and budget. When stashing away money, they can do so according to three labeled categories: spend, share, and save.

Please visit some of our other money-saving related posts:

A Personal Finance Review Will Increase Your Savings

Green Home Improvements for Your Charlottesville Home

Saving Water by Replacing Toilets

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