Saving strategies for financial goals
How to achieve your savings goals
We can make saving for everything from a laptop to your pension a lot easier with some useful tips.
In the same way having a fitness goal can motivate you to get to the gym when you’d rather be eating biscuits, setting a savings goal can prevent you from falling back into bad money habits. We’ve got some tips to help you get into the swing of saving.
Why should I set a savings goal?
Having a clear financial target gives you a reason for those sacrifices in other areas of your life. It also makes it easier to know what you need to put away, and for how long. Once you’ve spent some time exercising discipline over your cash you might find it becomes second nature. Here are some reasons you should have a savings goal.
The big things
Some things take so much money that, unless you have an unexpected windfall, they can only be long-term goals reached by saving regularly. These include things like your pension, a wedding or a child’s university fund. By setting these goals early and paying in consistently, you can take advantage of long-term investment strategies like stocks and shares.
Your emergency fund
One of the best reasons to save is so you have a financial safety net in case something unexpected happens in your life – like a big repair bill or a spell when you’re not working. By building up enough to cover your living expenses for a while (for example, three months) you can breathe easier that you’re covered for any mishaps.
Dream projects
Savings goals can be linked to your dreams and aspirations, such as buying a camper van to hit the road, getting a new home, or travelling the world. It can be a whole lot easier to put money away when you have something really rewarding at the end of your budgeting.
Cutting your debt
Having a savings goal can include paying off high-interest debts like credit cards, which can be a millstone around your neck. It can also prevent bad habits, like impulse buying and taking out loans.
How to set a savings goal
As with most tasks that can seem daunting, setting a savings goal is a lot easier when you break it down. We’ve got five simple steps to make reaching your target less tricky:
Give your savings goal a name and a deadline
Giving your savings goal a name suddenly makes it a lot more personal and helps you visualise the end results. And adding a deadline gives you a sense of urgency and target to aim for. Money in a savings account can be less motivating than a savings pot that’s ‘New electric car 2025’.
Work out your monthly/regular contributions
Once you’ve got the deadline for your savings goal in place you can work out how much you’ll need to save every month. This should be part of your overall budget, so you’re not putting away money you need for other things. If you feel like you could be saving more, it might be worth seeing where you can make savings in other areas of your life, like online subscriptions, eating out or cheaper holidays.
How to set a savings goal
As with most tasks that can seem daunting, setting a savings goal is a lot easier when you break it down. We’ve got five simple steps to make reaching your target less tricky:
Give your savings goal a name and a deadline
Giving your savings goal a name suddenly makes it a lot more personal and helps you visualise the end results. And adding a deadline gives you a sense of urgency and target to aim for. Money in a savings account can be less motivating than a savings pot that’s ‘New electric car 2025’.
Work out your monthly/regular contributions
Once you’ve got the deadline for your savings goal in place you can work out how much you’ll need to save every month. This should be part of your overall budget, so you’re not putting away money you need for other things. If you feel like you could be saving more, it might be worth seeing where you can make savings in other areas of your life, like online subscriptions, eating out or cheaper holidays.
Find the best place to save
With inflation high, you’re going to want the best returns possible – as the spending power of your cash will be reducing over time.
Equally, you need to make sure your money has the right level of access. For example, stocks and shares may give great returns over a long time, but if you need cash quickly you may have to sell when they’re worth less than you want.
Bring your goal to life with reminders
Saving money isn’t exactly thrilling, so to keep yourself on the straight and narrow, try to focus on what you’re getting at the end. You can set reminders on your phone calendar to tell you how many months you have left – and how far you’ve come. If you’re saving for something specific like a wedding or a new car, you can leave little reminders, like post-it notes or photo clippings, around the house and in places like your wallet or purse. Then you’ll be less tempted by impulse buys that could eat into your savings.
Track your progress
It can be a good boost to your motivation to see how your savings are building up, so check in regularly to your account. Lots of banking apps can be set up to send you alerts when your money goes in or hits a certain level.
It’s also a good idea because you can check on the interest you’re earning, in case you can get a better deal elsewhere. Also, with the risk of online fraud you should never leave it too long to check your accounts, in case there have been withdrawals from someone other than you.