Set yourself specific goals for your savings target

The last few weeks I have been doing a series on goal setting. Here is a summary of what we have covered so far

Write your goals down. Research has shown from a Harvard Business School study that those who wrote down their goals were earning ten times as much as the students who hadn’t written down their goals.

Make your goals SMART goals – Specific, Measurable, Achievable, Realistic and Timely

Set financial goals using different headings

Super Short Time - under a month

Short Time – two years or less

Medium Time – five years or less

Long Time – ten years or less

Long Long Time – 20 years or more

 

I like to use cars as an example of learning to set goals as during my time as a budget advisor and life coach I found many times when people buy their first car is the beginning of a downward slide financially. 

The first place to start with goal setting is to check out the facts to show how much you need to save to make the goal “SPECIFIC”.   For example different types of insurance will make a huge difference as to the amount that will need to be saved as shown in the tables below.

The scenario is - your Son (Grandson, Nephew etc) wants to buy a Ford Telstar 1989 2.0 5 door wagon.

 

The insurance company has given me the following quotes taking into considering the following facts : -

 

The agreed value of the car is $1365.00.

It is going to be bought without getting a loan

He is 18 years old and still on a restricted license.

 

My husband has just told me an 18 year old boy probably wouldn’t want to buy a five door station wagon! However because that is the quote I got for insurance,  that is what I am going to use.

 

Example One:

Example Two:

Example Three:

As you can see, it’s not all as simple as one might think. Just a simple thing like insurance can make a few hundred dollars difference for the amount to be saved.

Next week we will use these figures to look at how much has to be saved each week to achieve the goal of buying a car.

Sylvia’s  book, Parents: How to stop your kids from going broke is available from www.silbo.co.nz, Paper Plus Stores, and Christian Bookshops. She is also available to speak with community groups and give tips on how to raise financially savvy kids.