If you’re looking to save money for something special, you need to have a plan. People who set a money saving goal tend to save a lot faster than those who just wing it. Here are some tips to help you realize your next savings goal.
Create Your Goal
Your first step should be to ask yourself what you want to save for. Naming a goal will help make it real and will give you an incentive to reach it faster. If you haven’t set a goal for yourself, start small with a short-term objective, like buying a new stereo or taking a vacation. Once you achieve some smaller goals, you can aim higher and make long-term missions, like purchasing a new house.
Assess Your Financial Situation
In order to realize any goal you have to look at your finances to see if it’s possible to achieve it. Calculate your monthly income from your paycheck, benefits, side hustles or any other money coming in. Next, track all your expenses for the month so you know where your money is going and how much you can set aside for your goal each month. You can simply jot down expenses on paper or use an app to keep track electronically.
Make a Plan
Once you’ve assessed your finances and determined if your goal is reasonable, you will want to make a budget. Making a plan for your money will show you how much dough you have and where it’s going. It will also help you figure out the areas where you can save additional money to achieve your goal quicker. There’s no need for a complex budget, just create a straightforward one to plan your monthly spending and proactively track your progress. Try using a simple spreadsheet.
Make a Deadline to Achieve Your Goal
Once you have a budget and a plan to achieve your goal, you should make a deadline. To ensure you hit that date, store the money you save for your goal in a savings account to keep it safe. You may also want to consider opening a separate account just for your goals to keep them independent from your other finances. This will help prevent you from spending the money until your goal is met. One way to make sure you stay on track and hit the deadline is to automate the process. Set up your bank account to instantly transfer a certain amount of your funds each month into your savings account or separate goal account.
Don’t Dip Into Your Emergency Fund
It’s a good idea to keep your emergency fund money away from the money you’re saving for your goals. If you have a habit of dipping into your emergency funds to achieve a goal, try making the money less accessible by creating a separate savings account or even saving your emergency cash at a different bank. Remember that you should always prioritize your emergency fund before your other goals, so you have a cushion if something unforeseen occurs. If you experience a major setback, like losing your job, you don’t want to find your emergency fund depleted.
Track Your Progress
Setting a goal is not a “set it and forget it” situation. Make sure you remind yourself to track your progress and stay on top of your savings. Try adding an assessment date to your calendar once a month for you and your significant other to review your finances. Look over your income, expenses and savings, and make any adjustments based on changes that may have occurred in the last 30 days.