We all try to save every month by putting money away into a savings account without really defining what it is for. We just get told save, save, save.
But without any definite savings goals, we often dig into our savings when we overspend, seeing it as a cash reserve for when we run out of money.
Proper saving requires goals. You need to know what you are saving for. For some, it’s one goal like saving for a down payment for a home, and for others, there are a few goals like a dream vacation, a new car and education.
We are generally not very disciplined when it comes to sticking to goals. Below are tips to help plan savings goals and most importantly achieve them.
• Choose a specific savings goal – you need to know what you are saving for, that dream holiday or that new car. How much do you need to achieve this goal? These are all answers you need.
• Creating a savings timeline – how long are you planning on saving for? Set a time limit for your goal. This gives you motivation to work towards it. You might decide to go on a dream vacation in a year. Be realistic with your timeline and adjust it according to the size of the goal.
• Set monthly goals – the timeline you set will determine how much you need to save monthly to achieve the goal. e.g. a timeline of 4 years to save up a deposit for a home.
• Find extra money in your budget – add up the total of all your monthly savings goals and organise a direct deposit into a savings account on the day you receive your salary.
• Use the right savings tools – if you are planning on saving longer than 5 years, you may consider investing in funds to give you better returns and avoid your money depreciating. Chat to your adviser about choosing the right savings platform for long-term savings. Emergency funds should not be invested in locked accounts as you may need to access it before the term is up. You could incur penalties if you do.
• Track your goals – probably the most important aspect of saving. You may choose to put all your savings into one account or have several accounts for each one. You can keep a ledger to jot down the progress.
• Set small milestones - reward yourself for small milestones, like reaching the halfway mark on a savings goal. This will keep you motivated and committed to your goals.
Your deVere adviser will help you set up realistic achievable savings goals that suits your budget and your pocket. email@example.com
Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.