How to Achieve Your Savings Goals
Saving is setting money aside for one of the three types of savings: emergency, goal, and irregular expense. No matter the type of savings, how to save is the same. You must define the goal, secure the funding, and accumulate the savings.
Define the Goal
Like everything in life, saving has to have a purpose. You decide this purpose. By answering the questions of what, when, how, and where you define the purpose of saving. Thus, creating your savings goal.
First, ask yourself what you are saving for? This can be the experience of vacation or the financial security of an emergency fund. Then know when you need the savings by. This can be months or a few years. It’s truly up to you.
Once the what and when are identified, then you can determine how much you need to save. This can be figured out by dividing the goal amount by the number of months (ex: $1,200/12 months = $100/month). Last, determine where you will store the savings. You want to store your savings at an online-only bank or credit union like Ally or Alliant. They offer higher interest rates and prevent impulse purchases.
Once your savings goal is defined. You can create a savings goal statement using the formula below.
I will [savings goal] on [date] by saving [amount] each month for [# of savings months] months in the [account name] savings account.
I will vacation in Belize on 7/5/2022 by saving $200 each month for 18 months in the vacation savings account.
Secure the Funding
Because saving is not spending income, you have to have enough income left to save for your goals. Congratulations if you already have enough to reach your savings goal. Now, if you need to find savings for your goal, don’t worry. This just means you will have to reallocate your expenses so you have enough money.
You can do this by reducing your expenses in things that don’t matter as much as your savings goal. For example, you can reduce eating out to add to your savings goal. It’s not about saying no, but rather about saying yes to your goal by spending less elsewhere.
Accumulate the Savings
Now that your goal is defined, and we have allocated enough money to reach it. It’s time to accumulate the savings. In defining the goal, you identified where you will store the savings.
The easiest way to accumulate the savings is to automate saving. This is easily done by setting up a recurring transfer to your savings account. Start the transfer to your savings account with the bank that charges no fees.
Start the Fun
Now that you know how to save, you can start making your savings goals a reality. By defining your savings goal, you make the goal specific and clear. Through securing the funding, you allocate money towards your savings goal. When you accumulate the savings, you develop a habit of saving through automation.
Be WIZE with MONEY
Tip
Develop the habit of automated savings