Personal Financial Planning Tips : How to Design a Savings Plan

When designing a savings plan, it is wise to calculate a working budget for figuring out extra money to dedicate to the plan. Formulate a savings plan for short-term goals or retirement with tips from a financial planner in free personal-finance video.

Expert: Julie Asti, CFP
Bio: Julie Asti works as a financial planner for Asti Financial.
Filmmaker: Bing Hu

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Closed Caption:

My name is Julie Asti. I'm a Certified Financial
Planner with Asti Financial Management. And
today I'm going to talk about how to design
a savings plan. The first thing you want to
do in trying to design a savings plan is to
first create a working budget. Because you
want to make sure that after, as your income
comes in and you've paid all of your fixed
and your variable expenses that you have some
money that you can actually dedicate to a
savings plan. So the first step is definitely
going to be able to create a working budget
that provides you with hopefully positive
cash flow in which you can start a savings
plan. When you are looking into a savings
plan, one of the things that you are going
to need to ask yourself is what are you saving
for. And there really can be three main types
of goals. The three goals are really based
on time periods. Short term goals, intermediate
term goals, and longer term goals. Short term
goals are those that would be accomplished
anywhere from you know currently, a goal that
you are saving for in the next couple of months
to something that would be in the next three
years. So kind of zero to three years is a
short term goal. An intermediate goal would
probably go anywhere from three to ten years.
Maybe that's purchasing a car in five years
or buying a house in seven years. And then
a longer term goal is going to be anything
ten years plus. Maybe buying a vacation home
when you are fifty or being able to retire
securely. Those would be the three types of
goals that you would have, that you would
be trying to create a savings plan for. In
terms of looking at the three different types
of goals it's important to note that if you
are saving for a short term goal I would highly
recommend that you invest that money liquid.
And by liquid I mean investing into high yielding
money market account, checking accounts, savings
accounts. Something that's going to be save,
it's going to be liquid. You are going to
have a hundred percent guarantee a principle
and it's hopefully going to be FDIC insured
which means it's going to be invested in a
banking institution. Because for a short term
goal you want to make sure when you are ready
to actually purchase that goal that you have
the money now saved to enact that goal. You
want to make sure you have a hundred percent
of the money that you originally saved for
that goal. For intermediate or long term goals,
that's money that you can actually invest
in mutual funds, stocks or investment accounts.
Because on those types of assets you want
to have a growth rate. You want to have a
higher rate of return. Short term goals, savings
accounts are probably going to return anywhere
from one to maybe three or four percent. Hopefully
over the long term investments in the stock
market are going to return anywhere from maybe
five to ten percent depending on your risk
tolerance and the portfolio that you've chosen
to put together. But those you can take a
little bit more risk because you need to get
a little bit more return in order to reap
those goals over the long term. And that would
be how to create a savings plan for your short,
intermediate or long term goals. My name is
Julie Asti. I'm a Certified Financial Planner
with Asti Financial Management . And you can
learn more about my services and my company
at www dot asti financial dot com.