With many financial obligations binding you and your family, it’s understandable that some plans and goals will need to be pushed back for others. Sometimes, it might seem intuitive to start with meeting the most urgent or frequent financial needs – like paying the bills and expenses that recently come up. After that, short-term saving goals like future big purchases may seem more obtainable and practical to save for than expenses that are further away.
But some long-term goals are important and should be prioritized, among them saving for an emergency fund, college and retirement. Just think what will you do when it’s time for you to send your child to college, or retire, or when a big unexpected expense suddenly comes up? It’s better to save yourself the stress and what-ifs simply by saving ahead and being ready for these major events.
That said, resource is limited to go around among these goals and expenses. How do you balance everyday spending, short-term and long-term savings?
Money can be a limited resource, but some long-term goals are worth saving for.
- Only save for really necessary goals – These include the big long-term goals we mentioned above. Other goals can be considered and prioritized by asking yourself and discussing with your family: Do you really need to save for this? Is this something you need or something you want? Are there less expensive alternatives?
- Save for realistic goals – Don’t plan to have debt. If you think you will have to take out loans for a goal, you likely can’t afford it. Reconsider the goal’s priority and whether obtaining this goal will have more benefits than costs in the long term.
- Put long term into short term – After determining how much you will need to contribute to a long-term goal, divide the amount into yearly or monthly (recommended) installments. This way, combined with the short-term goals, you will know how much to set aside for savings each month.
- Save before spend – For every paycheck and income source, pay yourself first – set aside portion for established savings before setting a spending budget or even paying the bills. You can adjust how much to save according to financial obligations each month; the amount saved for each goal does not matter as long as you’re putting saving into them.
- Skim some expenses – Cook at home and save the family eat-out costs. Always look out for cheaper options. With a little effort and sometimes creativity, you can budget day-to-day spending with less and maybe even have extras to save more! (see our other saving tips)
Dividing your resources between frequent expenses, short-term and long-term savings can mean a longer time for you to reach each saving goal, but it also puts you closer to every goal.
How else do you balance your financial obligations?
0 Comments
This was a great article filled with a lot of common sense. I enjoyed the list setting out how to balance all three types of expenses.
I think this article is significant in the sense that it provides you with great information about saving for your short and long term goals. Sometimes it seems unrealistic to save for our goals, but it can be done if you just make a plan and stick to it. For example, the article mentions that you should save before you spend, so for every paycheck you should pay yourself first! It doesn’t matter how much you save each time just as long as you are putting something aside. It also stresses the importance of not ignoring your long term goals for short term goals. Long term goals like college and retirement are significant and it’s easier to start saving now. Saving is a necessary action that everyone should practice in order to gain control over their finances and have a better understanding of where their money goes.
This article stresses some of the most important lessons I have learned about money management- save for the big things first. It makes it so much easier to afford the long-term or big purchase things in life if you break down the amount into something you can set aside monthly. It also helps to put that savings amount to the side first so you don’t see it in your accounts and think you have more money to spend on luxuries and not the necessities.