How to Set and Reach Savings Goals

You can start saving money by setting specific goals. It is easier to withdraw money from the bank if you only deposit money on a regular basis. It is easy to spend too much and end up spending money that you have saved for savings. It is crucial to saving money for a particular goal or target. It is possible to be working towards multiple goals at once or focusing on one goal.

Select a Savings Goal

It is important to decide what you want to save money for. You might be saving for a downpayment on your home. Perhaps you are saving money for a vacation or for the purchase of your next car. You might be saving for retirement or an emergency fund. All of these are possible reasons to save.

Notice: Once you have a clear idea of what you are saving for you can determine how much money you will need to achieve each goal.

Save Time

It is helpful to establish a time frame to achieve your savings goals once you have established the savings amount and the savings goal. This will help you to be more motivated to work towards your savings goals.

Some timelines are straightforward. You may be aiming to travel in one year, or get the down payment on your house in two years. You may also want to establish benchmarks and set dates for other goals such as saving money for retirement or emergency funds. You might decide that you want $50,000 in retirement savings by the age of 30.

Set monthly goals

To reach your savings goal timeline, you must determine how much money you should be saving each month. For most goals, this should be easy. However, your retirement account will need to be calculated to include both your contributions as well as the rate of return. This can be done by a financial advisor or online calculators.

You can make extra money in your monthly budget

Add all your monthly savings goals together to create a lump sum. This amount will need to be included in your budget. This should be set up in your budget so it occurs automatically before you have the chance to spend it on anything else. You can either have your bank draft the amount every payday or direct deposit a portion of your check to a savings account.

Make sure you use the right savings tool

It is important to choose the right account type for your savings goals. Mutual funds are a good option if you plan to save money for more than five years. To earn more interest every month on your savings, you might also consider opening a high-yield savings bank.

Many money market accounts offered by your bank or credit union offer high rates of return. While certificates of deposit (CDs), have historically offered high rates of return in the past, you should still compare them with other accounts. These options offer lower rates of return than traditional investments like mutual funds, exchange-traded funds, and equities. However, they will still provide higher annual returns.

Warning! You don't want to keep an emergency fund in a CD or another account that can't be withdrawn. If you access the money after the term ends, you could be subject to a penalty. Savings bonds are not an option that can help you achieve your goals quickly.

To make it easy to move the money around, you can set up automatic monthly transfers for any savings vehicle. You should make sure you have enough money to meet each monthly savings goal.

Set Goals

There are many options if you want to save money for more than one goal. You can choose to keep all the money in one account, and just keep track at home. You can also choose to open separate accounts for each savings goal.

You might have two savings accounts. One account could be for your emergency fund and one account for saving for your home or vacation. You can protect your savings so you don't feel compelled to dip into the emergency fund as much.

Reward yourself for achieving basic milestones. This will help you remain motivated and on track to reach your larger savings goals.