How to achieve a financial goal next year

September 30, 1999|By LYNN F. LITTLE

How many times have you made the comment, "How I wish I had enough money to ... !"

We all dream of having enough money to make a special purchase, save for education after high school, plan a vacation, make home repairs or prepare for later years.

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We have our own ideas about what we could do with extra money. It's easy to dream about things - putting those dreams into action is the hard part.

You may say you can't think about tomorrow when you have so much to think about today.

Why not think about saving $2,000 by the end of the year 2000? The idea can spark an entire family to plan and work together.


Do you have a goal, or just a dream?


Dreams are pretty vague:

* "In a few years we hope to buy a house."

* "We want to send our child to college."

* "We want a new car."

* "We want to be comfortable in retirement."


In contrast, a goal is specific, something you can reach, is written down and has dates for a beginning and ending.

Saving $2,000 can help you turn your dreams into achievable goals. Here are some examples:

* "By the end of the year 2000, we will have an additional $2,000 for a down payment on a townhouse."

* "By the end of the year 2000, we will have $2,000 toward a vehicle."

* "By the end of the year 2000, we will cut our credit-card costs by $2,000."

* "By the end of the year 2000, we will reduce our educational loan by $2,000."

* "By the end of the year 2000, we will cut our medical bills by $2,000."

Families that manage money successfully use specific saving and spending goals. They have a plan that directs them toward the goals.

Keep in mind that money is a family affair. Talk about money as a family in a tension-free setting.

Let everyone in the family speak freely about their needs, as well as what the entire family should have. This is a time to explore and think about your options. It can be a time to decide what is realistic and whether any existing expenses should be eliminated.

Have everyone make a personal list of needs and goals, as well as a general list of things the family would like to have and do. This process can help families set priorities and realize the limits of their income. For example, your family may make a priority of paying off all credit charges except car and mortgage payments. Can this be done in the next year? How much will it cost each month?

The goals your family sets can become the savings plan. Goals have to be workable for you and your family. The goals must be within the family's income and resources. Be positive, but also be realistic.

The following guidelines may help with goal planning:

1. List several important short-term and long-term goals.

2. Estimate the cost of each goal and when you expect to reach the goal.

3. Record the amount of money already saved to meet this goal.

4. Figure how much money to save each month in order to reach the goal.

As you think about the family's savings plan, consider these questions:

* Does our family have three to six months' disposable income in an emergency or safety fund that is easily available if and when needed?

* Does our family save regularly?

* Does our family have a savings plan to purchase some big-ticket items instead of buying on credit?

* When our family uses credit, can we make a down payment larger than the required minimum?

* Does our family save at least 10 percent of family income?

* Does our family save enough for later years?

The more times you answered YES, the more likely your family has a saving plan. Any NO answers can help you identify areas to improve.

Once you have your goal in mind, write down at least two ways to reach it. With financial goals, your choices will be to cut or drop expenses or to earn more money through overtime, a second job or a home-based business. For each choice, write down at least three reasons why you should use this way to reach your goal. Then, write down at least three reasons not to use this way to reach your goal. After looking over the pros and cons of each option, choose the best option.

Action steps

Break your choice into action steps. Start by picking a date to start your action plan and also list when you wish to reach your goal. Writing this all down helps to jog the memory and can act as a "road map" in reaching your goals. See if these action steps are ones you and your family can manage.

Check your progress. If needed, make changes to the goal. These goals and action steps are written on paper, not in stone. Make changes that will help reach the family goals. If you find a goal is not as realistic as you first thought, change it but do not drop the goal completely. Action steps also may need to be changed.

Set the Money 2000 goal. Your family may be $2,000 richer by the end of the year 2000 by increasing savings and/or decreasing debt.

The $2,000 goal may be a combination of both. For example, $1,000 of increased savings and $1,000 of decreased debt equals $2,000.

The key to success is setting goals. People don't plan to fail - they fail to plan or set goals.

Maryland Cooperative Extension programs are open to all citizens without regard to race, color, sex, disability, age, religion or national origin.

Lynn F. Little is a family and consumer sciences extension educator for Maryland Cooperative Extension, Washington County.

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