Set Savings Goals

minusminustext size

posted 1/18/2013 in Realtor News

1. Set savings goals.
Start by writing down each of your goals on a 3"x 5" card so you can organize them easily. Sort the cards within each stack in order of priority. Write on each card what you need to do to accomplish that goal: When you want to accomplish it, what it will cost, how much you have set aside already and how much more money you will need to save each month to reach the goal.

2. Reduce debt.
One of the best investments borrowers can make is to pay off consumer debt with high interest rates. Establish a budget to pay down your existing debts-such as student loans, mortgages and credit cards.

3. Spend less than your income and save the difference.
Track your income and expenses to see how much money you have coming in and how much you spend. Use computer software programs or basic budgeting worksheets to help create a budget. Include as much information as you can and then set realistic goals for cutting expenses and saving money. Continue to track your spending and review your budget regularly.

4. Establish an emergency fund that can be used in case of financial emergencies such as hospital bills or loss of a job.
Determine how much money you are able save each month, then deposit that amount in a savings account at your local bank. Financial advisors generally suggest saving enough money to cover your living expenses for three to six months.

5. Set up a direct deposit and an automatic transfer to your savings account.

When you get paid, put a portion in savings through direct deposit or automatic transfer. Almost all banks will, upon request, automatically transfer funds monthly from your checking account to a savings account.

6. Save a portion of tax refunds, gifts, bonuses or other financial windfalls.
Before you consider frivolously spending your tax refund, consider using the extra funds to contribute to an IRA, make an extra credit card payment, buy a savings bond or one of many other options that will benefit your financial future.

7. Consider increasing your monthly mortgage payment.
The largest asset of most middle-income families is their home equity. Once these families have made their last mortgage payment, they have far lower housing expenses. They also have an asset that can be borrowed on in emergencies or converted into cash through sale of the home.

8. Build equity in your home or other property.
 Before tapping into the equity of your home to send your child to college, remodel your home or pay off your credit card debt, consider the pros and cons. While it may permit a higher borrowing limit, your home is considered collateral if you cannot make the payments.