Saving money is a major feat, especially as you enter adulthood. You might want to save money for many things, including trips and vacations, retirement, a house, a new car, your college education, and so much more.
No matter what you are saving for, even if you don’t know yet, it’s crucial to have savings goals that you stick to. While you might think it is difficult to set realistic savings goals, this post will discuss in simple terms what your savings goals should look like and how you can get there.
What Are Savings Goals?
Savings goals are goals you set for how much money you should save in a given time or how much money you should have saved for a particular expense.
Savings goals can come in many varieties, including creating a solid plan for how much you save from your weekly paycheck, how much you save every six months, or how much you need to save to go on a vacation. With a little effort, you can map out these financial goals and see what you need to achieve to feel more confident about your finances.
How Much Money Should I Really Have Saved?
Many experts recommend that you always have money saved in case of emergencies or disasters. But, how much? It is typically believed that you should have about one to two months of living expenses stored in an everyday checking account, plus a 30-percent buffer for your everyday life and spending.
In another savings account, you should also plan on having another three to six months of living expenses in case something unplanned happens. This may include events beyond your control, such as getting sick, being fired, or having a death in the family. Life happens, and sometimes you need to step back from your regular income. Having a financial cushion can make stressful life events much less emotionally taxing.
Have Money Automatically Taken From Your Paycheck
One way to reach your savings goals is to have money automatically deducted for savings from every one of your paychecks. Depending on where you work, you could have money that could go directly to a retirement fund.
Many workplaces also allow you to split your direct deposit into multiple accounts. If you place a certain percentage of every paycheck into a savings account that you don’t even look at, you will be building savings while most likely forgetting that money is even there. Money you aren’t tempted to remove from your account is the best kind of savings!
Map Out Your (Realistic) Goals
The only way to know that you will actually stick to your financial or savings goals is to map them out, either on your own or with a professional who is familiar with your finances.
Don’t create arbitrary plans in your head for your savings, as you most likely won’t stick to them. Instead, make your goals concrete in the real world, and let someone else know about them. Having another person be “in the know” about your goals will allow them to hold you accountable, making you more likely to stick to them.
Do A Financial Checkup
Doing a financial checkup and having a firm grasp of your finances and assets will also allow you to feel more confident about setting and reaching your financial goals. Here are the steps for a successful financial checkup:
- Take inventory of your finances, including calculating your debt-to-income ratio, figuring out where you spend the most money, and identifying areas where you can stop spending unnecessarily.
- Make a budget that you can stick to. This is the first step in avoiding financial hardship.
- Figure out both short-term and long-term savings goals. Determine what you are saving for in the future, whether that’s a vacation, retirement, or something else. Then, decide how much money you need to stash away to reach those goals.
- Remind yourself to do future financial check-ins to monitor your performance.
Assign An Actual Amount to Things
If you have a tangible item or event you are saving for, such as a new car or an extended vacation, figure out the actual amount of cash you need to save to make it happen. It doesn’t matter if it is small or large, but what does matter is that you know the exact number you need to get from point A to point B. This will make your savings goals seem much closer and more realistic.
Keep Following Up
The key to achieving your savings goals is not letting them fly under the radar. If you entirely forget about your savings goals or even what you’re saving for, you will likely never actually make them happen.
Savings goals should simultaneously be at the forefront of your mind while putting the money into a place where you don’t need to monitor it all the time. For example, if you constantly look at the money in savings that you could be using for other things today, you might be more tempted to take it out. So leave the money alone, and keep following up with your goals.
Use the Envelope Method
The envelope method is excellent for short-term saving and budgeting, especially if you pay for most things with cash. All you need to do is use a few envelopes and write a category of expenses on each (for example, gas, groceries, rent, loans, etc.) and then put all the cash you plan on spending for each of those things in the envelope.
The envelope method is a tried and true way to give you a visual aid regarding where your money is going. It has also proven to be a better budgeting tactic for people who tend to overspend.
How to Add More to Your Savings
There are many different ways to add more money into your savings account each month. However, one of the most effective ways to do this is to take on another income stream that goes wholly and directly toward your savings goals. This other income stream could be a weekend job, or it could also be a side hustle that allows you to make passive income while you work at your primary job.
Side Hustles to Add to Savings
One popular side hustle to earn extra income is to take paid online surveys for cash. Legit survey sites are easy to use, and you can make money 24 hours a day, 365 days a year! Researchers and companies are interested in your opinions and reviews and willing to pay you for your input.
While taking surveys for money won’t provide you with enough income to support yourself entirely, it’s great for adding a few extra dollars each month into your savings account to support your goals.
Personal Responsibility is Key
To achieve your savings goals, personal responsibility is the main element at play. You really need to want to make your goals happen, and you need to make a commitment to yourself to stop spending unnecessarily. Only then will you be able to get your dream home, car, vacation, and more!