Saving money for a “rainy day” is always good advice, but it can be difficult to remain motivated and consistent with your saving efforts if a specific goal is not set. Setting a clear goal or purpose for your savings will help you remain focused and more likely to reach your goal sooner.
Here are 4 simple steps for setting savings goals:
- Set a goal – what are you saving money for?
First and foremost, you need to determine what you are saving money for. Do you want to take the family on an overseas trip? Buy a new car? Refurnish the house? Once you have identified your goal, you can then determine how much money you will need to save to achieve that goal.
- Create a timeline – when do you want to achieve you goal?
Setting a timeline will provide further motivation to meet your savings goal. For example, you may decide to take an overseas trip in twelve months’ time, or have a deposit saved for a house in two years.
- Determine how much you need to put aside each month to achieve your goal
Once you have set a goal and determined a timeline, you now need to work out how much you will need to save each month. For example if you your goal costs $1,200 and your timeline is 12 months, you will need to put aside $100 a month. If you cannot afford $100 a month, you may need to rethink your timeline, or perhaps re-work your budget and look at ways you may be able to achieve the payments. It is important that the plan is realistic to be achievable.
- Set-up auto payments
Setting up auto payments of your pre-determined savings amount will ensure the money is deposited into your savings account every month. If you are not sure how to do this, contact your bank or credit union and they will be able to help you.
There are some handy tools online for setting savings goals such as this Saving Goal Calculator.
The team at Greentree Financial would love to help you achieve your financial goals.