Saving Plans

Read Time / 3 Minutes

Theme / Financial Planning

One question I’ll get from a lot of friends and clients – how do I practically save for things I want to do/purchase? I met with one friend who wanted to travel, save for a house, and save for a new car, and they were really struggling to find a strategy to save for all three things. I’m sure you’ve been at a similar point in life. Many goals, and not sure how to achieve them all. When it comes to saving, I come back to three things. Priorities, amount and timelines.

Start with your priority. If you could only have one of those three things today, which would you want? For this friend it was the house, they really wanted to own their own home. Then between the other two, which was the preference. Have a newer car now or a trip now? In this case, no preference. Then we move to the amount. How much is needed to do each of these things? The down payment was going to require at least $15,000, the trip was going to be an $8,000 European honeymoon and the new car, when accounting for selling the current car, would be about $4,000. Lastly, we address the timelines. The house didn’t have a set timeline, but the sooner the better, whereas the trip was going to happen in 18 months, since it was a honeymoon, and they figured their car would need to be replaced in about four years. They figured about $800 each month of excess to budget towards savings. With that information we can reverse-engineer their savings.

At $8,000 in 18 months, $450/month would cover all of it.

At $4,000 in 4 years, $85/month will eventually get them to a new car

And with the house there would be $265/month, which would take about five years.

When confronted with the numbers, they realized said they didn’t love that it would take so long to get to a home. I told them it would mean adjusting their goals, like the type of honeymoon to go on. Realizing that it was either the house or the dream honeymoon, they changed their honeymoon plans slightly, opting for a week in Central America instead of 10 days in Europe, which dropped their need to about $4,000. Giving them a new timeline of 2.5 years on the down payment, while still getting a honeymoon they would desire.

If you’re in the midst of saving for particular goals, try walking through these steps. Write it down, and figure out your plan, and if your desires aligns with your priorities. If not, adjust your goals. I ended up getting a call from that friend a couple months later and they had a three pay check month, meaning almost an extra $1,000 to save with. I offered that they had a priority list, put it to the thing they desired most (or towards the honeymoon for the original vacation plan). Last I checked they were halfway towards their down payment goal, and they were booking for the Central American honeymoon. There is no perfect plan for saving, but if this is where you find yourself, this is a plan I’ve found helpful. And it aligns with scripture. Habakkuk 2:2-3 says:

“And the Lord answered me: “Write the vision; make it plain on tablets, so he may run who reads it. For still the vision awaits its appointed time; it hastens to the end—it will not lie. If it seems slow, wait for it; it will surely come; it will not delay.”

So, write it down. Write down your goals, and your plan, and carry out the plan and watch it come.

Nathan Carroll

Registered Assistant

208-918-8655

nathan.carroll@christianwm.com