The $ M A R T Approach to Effective $aving
“A goal without a plan is just a wish.” Antoine de Saint-Exupery
March is Women’s History Month. This month’s blog is about being SMART with your finances.
Did you know that a study in 2015 by Catalyst (“Buying Power: Global Women”) reported that women account for nearly 65% of all household spending, or more than $29 trillion in global purchasing power? According to the US Department of Labor (2017), 51.5% of workers in management (professional and related occupations) are women. And the CPA Institute concluded in 2015 that by 2020, women will likely control two-thirds of the private wealth in the US.
Women are the new entrepreneurs! According to the American Express OPEN report (2016), women-owned businesses generated nearly $1.6 trillion in revenue, increased 45% between 1997 and 2016 and represent 38% of all enterprises. This is not only an outstanding achievement, but a trend that will continue to establish the role, presence and power of women in our economy as one of significant value and empowerment.
So, let’s look at how women can be SMART about their finances now and going forward.
S=Specific M=Measurable A=Achievable R=Realistic T=Timeline
Specific - Make your savings plan specific; answer crucial questions like, how much do I want to save? How often? For what purpose? By when? These questions will help give you direction. Say, “I will save $1,000 this year to build an emergency fund, instead of I will save some money this year.” You have just become specific about how much you want to save, for what purpose and a deadline.
Measurable - You can easily evaluate whether you have achieved your goal. The steps you’ve taken in making the financial goal specific makes it easier to measure. Calculate how often to save, how much per month or week to achieve that goal (1,000 saved in 12 months= 83.33 per month).
Achievable - Know what steps have to be taken. Take action! Think about setting up with your employer’s Human Resources department automatic deposits weekly, bi-weekly or monthly from your wages into a dedicated savings account. Or, contact your bank to set up transfers from your checking account into your savings with a similar frequency. These two are most effective.
Realistic - The plan requires ease of execution, using the best tools most suitable for you. Consider your present responsibilities and lifestyle, income and expenses (budget) to assess your cash flow for implementing the savings plan. After careful consideration, you may need to increase your income or reduce some household expenses. Be courageous, you’ll feel very happy when you achieve your goal.
Timeline - Set a time for achieving the Savings goal. Establishing deadlines will help to keep the goal from getting lost or overshadowed by daily responsibilities.
Below are some inspirational Saver Stories from America Saves.
Mary Brown from Wisconsin, “Learned many skills including creating and tackling a household spending plan and the importance of an emergency fund. Learning to budget and being mindful of my spending habits helped me save and more importantly, see the benefits of savings.”
Marchale Burton from Alabama, “Saving lets you see what you can accomplish when you put your mind to it. It’s empowerment! The key to building savings is making it a routine.”
Kisha Barns from Charlotte, North Carolina: “It’s liberating to know I have a safety net if anything were to happen and that I built that safety net with my own savings.”
Kiara Hardin from Chicago: “Having an actual savings goal to save for not only teaches the savings habit, but it teaches that there are rewards to saving. Learning how to save efficiently impacted my life enormously because I am constantly saving for something.”
Nicky Vasquez from Virginia: She learned to track her daily spending, saves monthly in a savings account through automatic deposits and doesn’t rely on credit cards in a pinch. “Establishing a written goal and taking steps to make it become a reality helped me and I know it can help others too.”
Denise Garrett is a financial counselor at the LDCENY and has more than 25 years experience in financial counseling and retail banking.