Ways to set your savings goals
The first step on your ‘savings journey’ is deciding what it is that you are saving for. Having an idea or a goal helps you decide on the amount and the estimated length it will take to reach it. Whether you are saving for an overseas trip, your wedding, a house, an education for your kids, or your retirement, having goals helps you to begin your savings journey while also staying on track. We have compiled five easy steps to help you set your savings goal:
Step 1: Mapping out your goal
It’s important to ask yourself “what am I saving for?”. Your goals could be short-term like buying a new fridge or taking a trip overseas or long-term like buying a home or saving for when you retire. Mapping these out and understanding what your goal is, will help you set up a plan and budget.
Step 2: Evaluating your finances
You need to assess your finances to see whether your goals are within reach. Look at your monthly income and any form of extra money you get in during the month. Track your expenses and financial obligations. This will outline where your money is going, how much you have left, and how much is reasonable to set aside each month.
Understanding this can help you determine where you could cut in your spending and put more towards savings. You can establish what your needs are; such as, food and housing and what your wants are (what you can live without) such as takeout meals or cutting down on a night out here and there.
To help calculate what your expenses are and what you should put into your savings, try using the 50/30/20 rule. This rule says that you should spend 50% on your needs, 30% on your wants, and 20% should go into savings.
Step 3: Give your goals a price
You need to find out how much you can save and how much you need to save. So, if you want to go overseas you should research how much your flight tickets would cost, your accommodation, your sightseeing, as well as travel within the area. Doing this will provide you with an estimate that you can work from. But keep a lookout for good deals and discounts.
Step 4: Date and location
You should pick a deadline for yourself. Decide how long you should save for and work towards that.
As you start your savings journey, you should also consider the different places you could put it in. You can take out a savings plan, use savings accounts or notice accounts, but try looking for the ones that will yield the highest and most competitive interest rate which can help you save faster. Also, pick a place where you know your money will be safe.
In this regard, we advise that you include an automated process, that way your monthly deductions will automatically go into your savings. This will also help you curb spending or using some of your savings.
Step 5: Remind yourself to stay on track
This is an effective way to stay on top of your goals. You could look at your progress monthly which will inspire you to carry on. Another way is to set up a visual representation. Try a mood board or a dream board. By visually looking at what you are trying to achieve will help you stay on track.
Even if you are not on track with where you want to be, do not feel disheartened. Check-in with yourself constantly and remind yourself of why you are doing it.
Remember, life is a journey and good things come to those who wait. As long as you start saving and you know what you are saving for, it will make it all that much more worth it