MOM-enomics with Booth Parker, CPA

Planning your savings goals is a crucial step in long-term financial health and stability. Booth walks you through the use of her free templates that empower you to know what your financial future can look like with the right budgeting strategies.

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  • (00:00) - Using the Savings Goal Tracker
  • (00:15) - Introduction to My Savings Template
  • (00:58) - Understanding the Emergency Fund Template
  • (03:04) - The College Savings Template
  • (04:54) - The Retirement Template
  • (05:53) - Using Financial Tools and Calculators
  • (10:58) - Prioritizing Debt and Savings
  • (11:45) - Conclusion and Further Assistance

This podcast is produced by Rooster High Productions.

Creators & Guests

Booth Parker, CPA
Financial guru by day; domestic diva by night and sharing it all in between.

What is MOM-enomics with Booth Parker, CPA?

Real moms. Real mom financial issues. Real moms in business. Real stories. I am Booth Parker. A CPA, wife, and mom that loves all things home and family. In this podcast, I talk all things money for moms, families, and small business. From tips to ideas to info you just need to know, I break it down so moms can apply it to their own families and businesses!


Today on the podcast, we are staying in line with last week's tutorial on the budget template. So today I'm gonna walk you through my savings templates. So if you'll recall from last week at the end, I spoke about how we would go into . Backing into the number you need for your budget to reach your savings goals.

So that's what we're going to walk through today using that. So if you don't have my templates for your savings goal tracker and you want to do that, they're linked in the show notes, you can download those, print them off. So it's a three part form. So I'm gonna walk you through all three, and then we will start looking at the numbers.

So the first template [00:01:00] in this bundle of three is for your emergency fund. So an emergency fund is typically three to six months of your monthly spending. So you. Really just wanna focus on the essentials, the things you would have to get covered if some kind of tragedy or something like that occurred, or another pandemic and you couldn't go to work and it took a while to get any kind of, income flowing back in.

So, you know, when you're in a dire situation, you can, eliminate those Starbucks runs and stuff pretty easily. So this, you really want to focus on . Three to six months of essential spending, things that you really have to spend money on and having a fund set aside for this in case it ever were to be needed.

So it's a high yield savings account is a great place to put the money. It. Earn some interest while it's sitting there and it's separate from your day-to-Day account, so you're not tempted to spend it [00:02:00] or think, you know you have more money than you really do for your budget that month and things like that.

So this is like priority to set aside for savings. So if you don't have an emergency fund set aside, I would start with this one. And you just want to, Declare how much you want to save. So if your essential spending is $3,000 a month, then you need to be saving somewhere between nine and 18,000. So you can pick your goal, maybe you choose 12, maybe you choose 15, whatever that is.

And then when you want to achieve that buy, and then that is the amount, you're going to set aside in your budget, towards your savings each month. So if you decide that each month, you need to be setting aside. $500 to reach your emergency fund goal, then that $500 is what transfers over to your budget in the savings category until this emergency fund has all [00:03:00] of the money in it that you think you would need.

All right.

The second page in this three part template is for a college fund. If you don't have kids, you can, . Just skip this one and not have to worry about that expense and lucky you, right? So we all know that college is, has just gotten crazy, crazy expensive. So having a plan for saving for college, especially when your kids are young, it's time is your best friend when this stuff is being done.

So the earlier you can do it, the better. So the goal here is trying to keep your children, out of student loan debt as best you can. So saving for them for college is ideal. 529 plans have gained a lot of popularity, especially with some new provisions that, there's a cap, but some of the leftovers, if they don't spend it all in college, can roll over to a Roth IRA and some things like that.

So the 5 [00:04:00] 29 plans have gained popularity again, the last couple of years, and there's a lot of them out there to review. So, if you're going that route, I would recommend you kind of meet with someone who specializes in 5 29 plans to find one that's most aligned with, with, with your goals and your risk levels.

So the risk level is very important. They tend to be conservative, so that they are more likely to meet their goals. but this, this little template here is, it's very similar. you know, the estimated cost of college, the goal date, this one's done by the year rather than the month, just so that you had enough lines.

But you could definitely, you know. Make that same month and you know, use a new one each year, whatever. So having your amount, you're saving every month going towards that total balance.

And then the last form in here is for your retirement fund. [00:05:00] So. Goal amount at retirement and the number of years until retirement, how long you have to achieve this number.

Okay. When you're deciding this goal amount at retirement number, you need to think about the lifestyle you plan to have. in retirement. Do you think you'll travel a lot? Do you think you'll just stay home and do things? So go ahead and quantify how much that lifestyle you plan to live will cost, and then you adjust it.

For inflation. So, you know, as we all know, , the last few years with inflation, a dollar today is not gonna buy the same thing in 15 or 20 years. So generally people use a 3% inflation rate. Some people like to use a higher one to be conservative. So that's just all kind of personal preference with your risk level.

Now as far as tools for figuring out what some of these numbers are, as far as [00:06:00] how much you need to save each month to achieve your goals, so I've got, a URL right here for you can go to. I like to use 7% when I'm doing these things. It's a conservative number and . That way you make sure you're saving enough. so this is the website link. on that third page, it's It's a free website you can go to, there's a lot of tools out there. You can Google 'em or whatever. But this one, I think this one's very user friendly and it's pretty robust. So you just go here to, Just go here to the financial tools and calculators and there's a savings goal calculator here and a college savings calculator here. They're very similar. there's some other ones in here too, but those are the ones we are focusing on right now. So I am going to go to the savings goal calculator.

All right, so here we are.

So let's [00:07:00] say that you had decided you needed $2 million at retirement to live the lifestyle you wanted.

So you're just gonna go right here and enter the $2 million. And then initial investment, do you already have some savings that you're starting with if you don't put in $1 because the calculator does not like zero, years to grow. So let's say you're planning to retire at 62 and you're currently 37, so you've got 25 years.

And the estimated interest rate, I'm gonna use 7%. I like the conservative number and then your compound frequency. So if you're gonna be putting, money in monthly into your retirement, then choose the monthly and then hit calculate. Um, this shows that you would have to contribute, [00:08:00] $2,469 a month.

Each month for those 25 years to have the $2 million at retirement. So a lot of times people do this exercise and they're like, whoa, that's a way bigger number than I thought I needed to be saving every month. So this is why starting as young as you can and letting. Time be your best friend is ideal.

There's so many people that wait until they're in their forties or even their fifties, and then they start panicking because retirement is hopefully around the corner for them and they start realizing how big the number is. So let's just, let me just show you. So if say you wanted to retire at 62 and you're currently 47.

You only have 15 years. Let's see how much it changes that monthly amount. So now you're at [00:09:00] $6,310 a month to achieve that retirement goal. And $2 million in this day and age is not a huge amount to have in retirement to live off of. So. This is just a really good exercise 'cause that's the number that needs to go back to your budget.

Remember, there was the savings category for how much you needed to be saving every month. So that's what we're doing here. We're backing into how much you need to be saving every month to reach your goal. Now, along the same lines with, showing the difference with the time. Let's say you're currently

27 and you want to retire at 62. Okay, so now we've got 35 years. So now you're at $1,110 a month. So it's a really big difference when you let time be on your side. And when we're talking about a college fund where you, even if you start at birth, [00:10:00] you really only have about 18 years to get there. So that one does not have as much time. So that time is crucial, crucial, crucial to start as early as you can.

So when you start looking at some of these things, it makes... I kept referring to throw pillows in the budget. One, as you know, a household won't, but it makes you see that you really don't need the Starbucks or the throw pillows or, maybe so many subscriptions, maybe just Netflix. You don't need Hulu and Paramount and all of those.

so it really starts to put into perspective where your dollars could be going and being much more beneficial for you and your family long term. So I hope this helps you get a better grasp on the type of savings you need to prioritize and how you reach those savings goals with putting the amount into your monthly budget.

Do think about if [00:11:00] you have credit card debt and high interest debt, like some kind of personal loans and things like that that you are trying to pay off.

They're gonna take priority. So go ahead and put that extra money towards them, then get your savings going. So you definitely wanna eliminate the debt because if you're paying, you know, 17 plus percent interest, on some of that debt, it's more beneficial to go ahead and get rid of that and then start, your savings.

So get the debt gone so that you can start getting the savings going and really, really focus on that budget and making it. Use every single dollar of your income with intention. That is the key here.

Thanks so much for watching. I hope this helped you get a grasp on deciding how much to save in your monthly budget to reach your different savings goals.