I think no matter your current relationship with personal finance, you can look into the future and anticipate what you may need to buy. It could be as simple as a set of tires in the next year, or replacing the entire car in the next 2-3 years. If you can identify these needs and goals, you can start saving for them.

Now, I remember the days when I would struggle to make it to the next payday, much less “saving for the future”. I understand, because I’ve been there. If this is you, don’t despair. We want you out of debt probably more than you want out of debt. What I’m talking about today might not pertain to you now, but it should get you thinking about things in the longer-term at the very least so that they don’t become “emergencies” down the road. If all four tires are bald, it should come as no surprise that you need to replace them sooner rather than later, so let’s put together a plan to do that with cash.

In fact let’s start with tires as an example. The last time I bought tires it was about $800. If you have your Baby Step One Emergency Fund of $1000 in place you’ve pretty much just used all that. So if you can wait a few months, let’s do our best to save extra on top of the Emergency Fund. You’ll do this by trimming the budget each month as much as you can. Or possibly, working some extra overtime. Or, selling something of value – hold a garage sale. I kid you not, the first time we held a garage sale we made over $1000. Probably can’t do that again cause we sold all the good stuff! Anyway…here are the steps to save up and replace your tires:

  1. Identify the cost of the item you are saving for. In our example, a set of tires cost $800. If tires happens to be what you need to save for, call at least two different places and get the total, drive-out price with tax (and stems, and warranty certificates etc etc). We are still assuming $800. (Side note: we’ve always had great luck with Discount Tire)
  2. Determine how much each month you are going to save from your budget. This will be the plan – let’s assume it is $100.
  3. At this rate it will take you eight months to save for the new set of tires.
  4. You can also divide the $100 into the number of times you get paid per month. If you get paid on the 15th and 31st of the month, you would move $50 each pay period into a savings account or into a cash envelope as a sinking fund. Be sure to account for this transaction in your budget each month.

Now that you have your numbers and your plan, start tracking! Use a spreadsheet, a calendar, a legal pad, or the back of an envelope – and hold yourself accountable. Remember your poor bald tires and this goal the next time you’re in the mall. Or the next time you’re in Best Buy, holding that shiny new multi-function WiFi enabled Hub Smart remote control that costs $200…remember that you are saving for a new set of tires (or whatever your goal is).

As you track this month to month, it won’t be perfect. Something will come up. It always does. BUT, you should make progress toward your goal each month. Maybe one month you can only save $50. I bet you will find a month where you can make it up, and save $150. I’ll add a little tip, in our experience we always spend more money in November and December because of the holidays. Don’t get too aggressive on your savings or other money goals during those months, if you know you will also be spending more money on holiday-related items and activities. You only have so much money available to spend. And since we aren’t going into debt for anything – right? – you need to allocate your funds appropriately.

As for us, we are actively saving for a vacation in 2019, one or possibly two replacement cars in 2019, and as a longer-term goal, to have the mortgage paid in full in 2020 or 2021.

How about you? What are some long-term savings goals you are working towards?