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Consumer Tips from Your Community Banker
(December 2014)


Your Savings Plan: Balancing Long- and Short-Term Goals

How many savings goals does your family have? Many Wisconsin consumers have a long list of needs and wants. Retirement, college education, a new(er) car, and an emergency fund might top the list of needs. The list of wants is more varied: charitable giving, a boat, a Harley, a snowmobile, an ATV, or maybe an Alaskan or Caribbean cruise. How can you ever fulfill these wants and get ahead?

Whatever your dreams, some goals require a longer period of savings (retirement, college), while others are short-term: adding a deck to the house, taking a fishing trip on Lake Superior, or buying a camper.

Consider tackling them one at a time in 2015. Begin with an emergency fund. Financial experts suggest saving at least three months of expenses as a cushion in the event of a layoff, or to handle a major car or furnace repair. Determine how much you need to meet expenses if your major source of income suddenly ended.

Next consider retirement, college education, or other long-term goals. Depending on your age, available employer programs, and the age of your children, this number will vary.

Then, decide how much to set aside for each goal monthly, beginning in January. If your emergency fund is nonexistent, you may need more than a year to build it up before tackling short-term goals.

Finally, prioritize your short-term goals. If everyone in the family would enjoy camping in Wisconsin state parks, maybe a camper is a higher priority than an item that only one family member will use.

Once you know what you want, its' easier to strategize how to fulfill your goals. Count yourself lucky if an employer offers a retirement savings plan that can leverage the funds you set aside. Visit your Wisconsin community bank to set up a regular transfer of money into your emergency fund, so that savings happens automatically.

This planning exercise may reveal that your income is too low - or your monthly expenses too high - to meet your savings goals. If that's the case, revisit your budget to search for costs that might be cut or consider ways to increase your income.

When your emergency account reaches your goal, set up a separate account for your priority short-term goals and have your automatic deposit go to this new account. Whenever you withdraw funds to pay for something from your emergency account, you can return to making deposits to it until it again reaches the level you set. Eventually you will have both an emergency fund and an account to use for some of the items on your "most wanted" list.

Family financial management is an art as well as a science. Your financial plan impacts your daily life, reflects what's important to you, and shapes your legacy.





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