The S.M.A.R.T. Way to Save for Large Purchases

By Jenny Schaub, Program Coordinator, Hancock County Saves, OSU Extension Hancock County :: This article comes from the America Saves blog.

Summer just ended and I’ve already started thinking about next year. Taking a beach vacation will my “big purchase” for the year, which leaves several months to plan ahead to save for this expense. But am I prepared? Do I have a timeline? Do I have a SMART goal set? My answer to all of these questions is a resounding “YES!” But what is a SMART goal?

A SMART goal is a clearly defined action plan that will get you to a specific and measurable result. In essence, SMART goals are roadmaps based on your choice of starting and ending points. Statistically, our society believes that goal setting is important, but less effective unless you write them down. It has been shown that if you write down your goal you are 80 percent more likely to reach that goal. While there is never a guarantee that you will definitively reach your goal, what a SMART goal does do is provide you with specific and actionable items with a clearly defined timeline. Using my beach vacation as an example, let’s walk through how to set up a SMART goal for yourself:

  • S – SPECIFIC: I’ve done my research, and a beach vacation for me and my family next July will cost at the most $3,500. My specific goal is to save $3,500 to pay for this vacation by April 15, 2016 (8 months). This will allow for me to have more than enough to cover the cost. I estimated and made my goal using the high end of the estimated cost for that time of the year.
  • M – MEASURABLE: This specific goal was set with a start date of August 15, 2015; a timeline of 8 months to achieve my savings goals. In reviewing my current budget, I know that am able to save $300 per month, times 8 months, with an additional (approximate) $1,100 coming from my 2016 tax return. My goal is measurable – each month I can look at my savings and see if I am on track.
  • A - ATTAINABLE: Prior to setting this goal and timeframe, I sat down with my co-spender to determine what we could afford each month. We looked at a full year’s worth of income and expenses, compared highs and lows and what we could conceivably afford without putting our budget at risk or disrupting our established emergency savings.
  • R – RELEVANT: Is this goal relevant to what I want to accomplish in the next 8 months? Yes. Being able to provide my family with a new experience without going overboard on a budget is important to me.
  • T – TIMELY: Is there a deadline? Yes; this goal has an end date of April 15, 2016. By allowing myself the ability to schedule a trip before it’s considered “last minute” is important to me. Eliminating the stress of a wait and see approach is something that I considered when selecting the deadline for this specific goal.

SMART goals help to focus energy, time, and strengths on achievable and realistic goals – eliminating wasted time and efforts. Having a specific, written goal will help you to plan for those big purchases. Whether it’s a family vacation, new car, new appliance, or down payment for a homeHaving a specific and actionable road map to get there will help steer you to that destination.

Tip of the Day

  • Written by Guest Blogger | April 25, 2014

    Develop a long-term plan for financial readiness by creating financial goals and striving for milestones. Positive outcomes usually start with a goal and a vision. http://ow.ly/sCvQQ

Saver Stories View all »

Building a Six-Figure Savings While Enjoying Life

Written by Jackie Toops | November 13, 2020

Does the idea of saving up hundreds of thousands of dollars seem impossible? How about doing it while still living an enjoyable lifestyle?

For military spouse Martina and her husband, an E-5 in the Navy, accumulating a six-figure savings has become a reality. One might think that in order to save this much, it would take a great deal of sacrificing and forgoing a certain quality of life, but Martina and her husband would disagree. “Over the past few years (about five), we've managed to save almost $120,000 while mostly living on one income. We've learned so much about easy ways to save money and live a good life,” shares Martina.

Read more...

From Shopaholic to Saver

Written by Jackie Toops | January 13, 2021

Many of us spend too much money on things we don’t need, but we don’t always know why. It’s easy to get a quick fix from retail therapy, but before we know it, our hard-earned money is gone. Oftentimes, when we engage in a “shopaholic” lifestyle or sporadic shopping sprees, we still experience feelings of emptiness, but to make it worse, we now have debt, too.

Khanmany was a shopaholic who turned everything around. She is active duty Navy and shares, “I was spending too much on things I didn't need. I was going shopping for no reason and was trying to fill a void. I was running up every credit card I owned to include Victoria's Secret, Military Star, Navy Federal, TJ Maxx, JCPenney, Macy's, USAA, and was only paying the minimum payments.”

Read more...

Involving Kids in Family Finances

Written by | April 19, 2019

 

One of the best lessons we can share with our kids is about money. By middle school, kids should have a good understanding of how money works as well as the importance of saving.

Read more...