As a youngster, my parents did a great job of teaching me to “save, save, save.” Piggy banks and hiding money under my mattress (from older brothers) were all typical in the Hale household.
Saving is part of the bedrock of a strong financial life, but it helps to define what you’re saving for. Put another way, when it comes to saving it helps to give each saved dollar a name tied to its purpose.
The most common example of this is retirement. You may have money you’re setting aside in a 401k, IRA, or pension plan with the purpose of spending those dollars in retirement. But don’t stop there. What about saving for a child or grandchild’s college? Or for a down payment on a home? It’s great to save, but saving with a direct purpose in mind can motivate you to keep working at the goal. Some other saving goals may include:
A family vacation to a warm place each winter (this is on my list!)
A large down payment on a new truck
Christmas shopping (raise your hand if you’re guilty of overspending here!)
These and countless other goals can be deliberately saved for, even if it’s just $50 per month.
Naming your goals and setting money aside regularly for them will not only motivate you, but will keep you from turning to that easy (yet dangerous) source of money: credit cards. More on those next time.