Q&A: How can I track my many savings goals?

I applaud people who want to save money and recognize they need a plan to reach their goals.

Keeping savings goals in mind is especially important when you create a monthly budget. A common personal financerecommendation is to pay yourself first, which is a hard concept for many people who think they have too manyexpenses to set money aside for savings.

Like many challenges, staying on track toward savings goals is best accomplished with a steady approach.

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You start with your monthly budget, which should have savings goals accounted for from the start. You should set aside money every month for both the unexpected and for planned purchases of “wants.”

Funds for the unexpected, or emergencies, act as shock absorbers when life throws you for a loop. Blown tires, “surprise” school projects or medical emergencies are facts of life. Of course, losing your job can be the biggest financial setback of all. I recommend that an emergency savings fund should be enough to cover six to eight months of living expenses.

Saving for discretionary purchases is also important. If you can avoid debt to buy a new car, fund avacation in the tropics or go back to school to further your career, so much the better.

To track progress on several savings goals at once, set up bank accounts for each one and name it for that goal. Divide your monthly deposits into the “New Car Account,” or the “Flat Screen TV Account,” or whatever it is you are targeting with your savings.

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In the old days you would track those accounts with a savings passbook, writing your deposits into a ledger each month. You watched the balance grow and, if your savings rate dipped, that was a sign you needed to examine why your saving behavior wasn’t advancing you toward your goal.

New technology offers many more convenient tracking options than the old passbook, but whether you use an online tool or a spreadsheet, the principle remains the same. If you find yourself going off track, you’ll need to dig into the details of your budget to understand why.

For some people, a visual savings tracking system placed prominently in the home is a helpful reminder. Think of the rising thermometer illustrations associated with fundraisers that show progress toward the goal. This can be especially helpful when the whole family is tracking progress toward a common goal, such as a summer theme park vacation.

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Involving your family or friends in discussions of your savings goals adds accountability that can keep you on track for success. You don’t need to share specific dollar amounts with your friends, but talk about milestones like reaching 30 percent of your goal.

There are a number of perfectly workable strategies to track your savings goals. The trick is staying on track when immediate gratification feels very tempting.

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