Now that we have finished the holiday season it is a good time to think about our personal savings.
The spirit of generosity and gift giving in the holiday season is wonderful though it can often create stress by draining our bank accounts. The start of the new year is a good time to develop a budget and confirm your savings plan – plus you can plan for next year’s holiday spending to avoid future stress!
My wife and I have a holiday tradition of using the break from work every year to make our family budget. We confirm our ‘big rock’ expenses and set our annual savings goals.
Savings goals are powerful as they help us focus on the future. As a family when we talk about our savings, we think about the things we are looking forward to in the year ahead. We then determine how much those activities will cost so that we can plan to pay for them with our savings and avoid having to borrow money. Our savings are a great way to help us achieve personal or family goals. In the shorter-term, our savings goals also include fun activities like family vacations. Our longer-term savings are focused more on our responsible goals like savings for our kids’ education and our future retirement.
As a family we also try to think about how we can reduce our expenses every year to boost our savings. A decision we made many years ago was to only have one car for as long as possible despite having to juggle getting to our jobs, volunteer commitments and having two kids involved in various activities. Over the 12+ years that my wife and I shared a car, we saved over $5000 every year. We were able to use the savings from having one car to achieve our savings goals of paying down our mortgage and going on a trip to visit family living overseas.
For many participants at Momentum, it is often really hard to save money. I’m always amazed by so many of our participants who save regularly and achieve their goals despite the difficulties of making ends meet. Participants like Veeresham, who was able to save $400 every month while working two low wage jobs to support his family, is an inspiring example. It wasn’t easy for Veeresham to save regularly. He and his family made sacrifices – like when Veeresham worked over 300 straight days without a day off. Veeresham had short-term savings goals like paying monthly bills on time, saving 10% of his income and building a savings reserve for any emergency expenses. Veeresham’s long-term savings goal for his family was for them to own their home. With help from Momentum’s homeownership matched savings program they were able to purchase their townhome last year! So many Momentum participants over the years are inspiring examples of how the power of savings changes lives.
In our Financial Literacy training programs, we often describe how if you can manage your money, you can manage your life. Getting control of your finances and becoming more focused on the future by setting savings goals is empowering. You can have the security of knowing you having a savings cushion for any unexpected expenses and can work towards big goals that help you get ahead like paying for school or a new home. As we start a new year and decade in 2020, I encourage you to also think about your dreams, and set savings goals that you can achieve.