Saving isn’t always easy. Aside from the ever-increasing cost of living, many household incomes have been seriously impacted by Covid-19. Businesses and jobs have been lost, and many people have had to start all over again.
Even without a global pandemic, finding ways to set aside money for savings can be a challenge. That said, having a plan can put you on solid footing to reach your savings goals. Whatever your situation or the amount you can save, you can benefit by following a few basic tips.
Create Specific Savings Goals
When you document your savings goals, you establish a quantifiable amount. Having a specific amount to work with enables you to determine how long it will take you to get that amount.
The key is to be as specific about your goal as possible. Avoid making generic goals like ‘pay off some debt.’ Which debt? How much are you paying off? The more specific you are, the more focused your savings plan can become.
Make sure that the goals are a good balance between ambitious and realistic. They should cause you to stretch a little outside of your comfort zone but still comfortably fit within your budget.
Create A Savings Schedule
Now that you know what you want to achieve, you need to work out your savings timeline. This will depend on a few factors, and you should ask yourself the following questions:
- How expensive are your goals?
- How urgent are your goals?
- How long are you able to save?
Depending on the answers to these questions, you can create a workable timeline to achieve your goal. Remember that in the beginning, you might want to set smaller goals with shorter timelines until you get used to setting money aside.
Determine The Amount
Once you know what your specific savings goals are and the timeline within which you’d like to achieve them, you can reverse engineer how much you’ll need to set aside each week or month.
Work out what you will need to save each month based on your goals and timeline. You can adjust your goals and your timeline slightly if it’s too optimistic, but also remember that positive change sometimes requires short-term discomfort.
Do the Work to Make it Work
Now that you have an ideal monthly amount that you want to save to reach your goals within your timeline, you need to actually stick to the plan. This can be tricky at first since most people have established spending habits that can be difficult to change.
It’s important to remember that it may take some time for you to adjust, but you will need to put in the work to make your plan work. That means making some often difficult choices. You may need to put daily trips to the coffee shop on hold or forego that expensive clothing purchase. Keeping positive reminders about how you will feel when you meet your goal can go a long way in motivating you to make these sacrifices.
Another way to re-evaluate your budget is to take a close look at every expense you have and categorize each by necessity. This can shed light on where you may be spending money unnecessarily.
This process requires you to have the utmost honesty with yourself about what is needed and what isn’t. In most cases, if you look hard enough, you’ll find that extra little bit to save.
Automate The Process
One of the best ways to ensure you stick to your savings goals is to automate where possible. If you can, set up automatic transfers into your desired savings account each week or month. This allows you to avoid temptation and the possibility that you might blow your budget. Sending the savings directly into a fixed-term savings policy that limits withdrawal is another great way to curb temptation and maintain adherence to your savings plan.
Following these five steps will put you on the right savings track. The sooner you start, the sooner you can enjoy the satisfaction of reaching your goals.