Why is it important to save money?
Sometimes we have expenses that are bigger than usual.
Other times, we have expenses that we didn’t expect.
Or sometimes we’re simply trying to save up for one of those items on our ‘wants’ list!
Most of the time, we put our savings somewhere separate from the money we plan to spend. You might put your savings in a jar. You could also put your savings in the bank. There are different kinds of bank accounts and investments that can help you save for different things. Here are just a few examples:
For a great workbook to figure out what your savings goals are, and how to accomplish them, check out these great resources:
In Canada: RESPs and Other Ways to Save
In the US: Developing a Savings Strategy
Setting Your Financial Goals
Setting financial goals is your first step to managing your financial future. When setting your financial goals you can think about them in three ways:
short-term (0 to 1 month)
medium-term (1 to 6 months)
long-term (more than 6 months)
Short-term goals should be measured in weeks. Short-term goals provide immediate feedback and gratification. Examples of short-term financial goals:
- I will go to the bank and start a savings account with $50 by next Friday.
- I will put $50 into my new savings account from each paycheck starting with the next paycheck.
- Starting Monday of next week, I will bring lunch to work every day.
Medium-term goals should be accomplished within 6 months. They are achievement-oriented and provide the opportunity for reflection and feedback. Examples of medium-term goals:
- By the end of three months (August 31, 0000) I will have $400 in my savings account.
- I will shop for car insurance and find ways to save at least 15% on my payment by _______ .
Long-term financial goals can take years to achieve. These may include paying off or saving for a car, paying off your student loans or credit card debt. They can also include saving money for a down payment on a home, and your retirement. Examples of long-term goals:
- I will be in a new home in two years, with a 20% down payment.
- I will save $20 each pay to go on a trip after I graduate in ______________ .