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Looking for smart financial goals for 2021? Choose to revamp your savings account strategy. Included in this post is a free savings tracker printable worksheet to help you get started below.
This worksheet is the visual component used to help motivate your savings and to entrain your thinking about your savings account in three layers. A visual chart towards money goals is very motivating to me. I even posted one on my closet door as a 10-year old saving up for a horse!
Savings trackers can bring a little extra motivation to saving money since it’s so rewarding to watch the visual progress towards your goals. Keep this free printable in your planner or posted on the ‘fridge, anywhere you’ll see it often to help motivate yourself. I highly recommend using this savings goal chart with FriXion erasable markers so you can add notes, write in specific dollar amounts, and make updates throughout the year without having to scratch things out or reprint it. Erasable pens and markers are one of my favorite things for my own bullet journal style notebooks where all my brain doodles go!
What's In This Post
What is saving money for?
Minor expenses are what makes up your day-to-discretionary spending. It’s spending that fits into your monthly spending cap. Sometimes small emergency expenses are even absorbable into your monthly discretionary spending cap. That’s great when that can happen.
But there are a wide array of unplanned expenses, as well as infrequent planned expenses, that don’t fit into your monthly spending cap. These require some separate money saving. Essentially, money in savings should be part of a strategy that 1) protects the monthly spending cap from overages and 2) protects the really important savings for long term plans and dreams. Balancing these two things is where the sweet spot of financial stability lies.
1. Planning for the unplanned: your emergency fund
First, list out potential emergency unplanned expenses that you could feasibly face in the year ahead. In my experience having at least $10,000 is necessary for this category. But yours may be different. If you don’t own a home or car, for example, costly home and vehicle repairs that can strike suddenly shouldn’t affect you. Consider whether you have kids or other family members depending on your income alone or whether income is also brought by a partner, what essential items you have that could require repair or replacement, how stable or dependable your job or income is, etc.
Using this list, come up with an estimate of how much your family should have available at a moment’s notice to cover plausible emergency situations (job loss, disability/illness, big immediate costs, etc). On the worksheet, this is the top layer of the ice cream popsicle. The top layer is the part where you take a bite out first, with the lower sections still intact. Essentially, your emergency fund is the top layer of your savings, protecting the money below intended for more meaningful purposes.
2. Short-term financial goals & irregular bills
Much like the list of potential emergencies, also make a list of big-ticket expenses you have in the year ahead. Short term financial goals examples include vehicle maintenance (tires, brakes, etc) that may be due soon, planned home maintenance or improvements, biannual taxes due (& other less often than monthly bills), this year’s vacation, special events (birthdays, anniversaries, etc.), the school trip to Europe your kid is signed up for, Christmas gifts, and so on. This is essentially whatever spending occurs throughout the year outside the spending that is governed by your monthly spending cap.
These bigger ticket items can sneak up on you throughout the year and throw your monthly budget into a tailspin. But this layer of savings is especially for those bigger ticket essential or preplanned things. This layer of money protects your monthly cycle of money in and out, while also still protecting against repeatedly dipping into money for short term wishes and needs that you’d rather use for long term financial goals and family dreams. So, estimate how much in the next year you anticipate needing to save for such shorter term needs, and write that total in your printable savings tracker.
3. Long-term family goals & family vision
Now, the most protected layer of your savings needs to be your long term dreams and goals. For us, it’s moving to the country some day at our little farmette. So substantial land down payment and building infrastructure money are required. That’s a rather long term savings goal.
Your long-term financial goals might be much nearer term, but generally should not be something already planned within the year ahead. A long term financial goals example may be a particularly extravagant vacation for the family down the road, buying your first house, a major home remodel, early retirement, or really anything that represents your vision for your family in the future. This layer may also represent a combination of multiple specific goals. The point is to come up with a total to get started so you have some separate protected layer of savings dedicated to aspects of your longer term family vision.
In conclusion…
Performing this exercise once per year will sharpen your long term money management. As things with your long term vision for your family firm up or evolve, you can update the long-term financial goal total. As this year’s plans give way to next year’s plans, your middle layer of short term planned expenditures will change. Likewise, you will continually replenish, as needed, your emergency fund. Over the years, you’ll learn what target total that emergency fund should be, which will likely increase over time, and you can adjust accordingly.
If you’ve never had an emergency fund, just having $1,000 earmarked for unplanned, immediate expenses is a fantastic goal to start with. Then push yourself to slowly grow that into a larger and larger layer of protection. Challenge yourself in this department first, as having an emergency savings fund will ensure you can be successful as you save money for your goal-oriented second and third savings layers.
It doesn’t matter if you use different accounts to literally hold these three layers of saving money separately or not. But thinking of your savings in these three parts will help you in your financial journey, from reliably paying the bills each month all the way to building those long term dreams you have for yourself and your family.
Take the next step for tracking your savings here!
And grab your free printable savings tracker: