As a refresher, John and I are saving money for a down payment on a house. Our budgetary weakness is food and eating out. On the positive side, we don’t spend much on shopping or entertainment. We value living simply and spending time with family and friends. Our intention is the whole premise of Fiscally Chic. Saving money with style and living life to the fullest.
Print from MursBlanc Etsy shop ($20)
â– S = Specific
â– M = Measurable
â– A = Attainable
â– R = Realistic
â– T = Timely
How much do you need to save? And don’t just say “I need to save more.” What is “more?” If you don’t have a specific amount in mind, how will you know when you get there? You probably have a good idea of the price tag based on your vision.
Dollars are pretty easy to measure, but what happens when your “vision” dollars start to mingle with your “needs” or “wants” dollars? In order to properly measure your savings, it’s best to create a separate savings account. I like to use ING Direct. It’s an online bank, so it has a higher interest rate (the good kind). I can automatically transfer money from checking to savings on my schedule and withdrawals take a couple days. That means I’m less likely to pull from our savings on a whim. And with automatic transfers, I don’t even miss the money if it’s not available to be spent. You can find other savings accounts and interest rates at bankrate.com.
Your monthly savings goal should be reasonable. Set yourself up for success. No need to drive yourself into the poor house trying to save for something enjoyable (i.e. European vacation). To stay motivated, set aside an amount that’s not too far out of reach. We’ve cut out a few extra frills by dining out less frequently.
At the same time, your goal should be a little bit of a reach so that you’re willing to work towards it. That makes accomplishing the goal even more worthwhile. So set the bar high enough for a satisfying achievement!
Set a time frame and mark the date on your calendar. Again, be specific, not just “in the next 5 years.” And be realistic. Unless one of us wins the lottery, we probably won’t have a 20% down payment in 3 months. Automatic transfers are another way to stay timely. Schedule transfers for once or twice a month so you won’t forget to stash the cash.
Purchase print from Ork Posters for $18
John and I use Mint’s goal tool to track the progress of our down payment. It’s as easy as entering our goal, setting a date, and linking a savings account. I then know how much we need to save each month, which is factored into our budget. Mint emails me our progress every month and offers savings advice and information about the home buying process.
You can obviously track everything in an Excel spreadsheet or on a piece of paper, but I like the convenience of having everything online. That way I can access the information on the go and make changes as necessary.
Don’t be afraid to take ownership of your finances! The best way to become financially independent is to learn about the different resources and tools. And ask questions!
(Disclaimer: I haven’t been compensated by Mint, ING, or bankrate.com for this post. These are simply my opinions.)