Having emergency funds or just having some money in your savings for a rainy day is a great way to minimise stress when it comes to your finances. By creating a plan and prioritising saving, you’re more likely to develop habits that make your money work for you. If you’re looking for help when it comes to being a better saver – here are our top 3 steps to hit your saving goals.
1. Map out the overall goal
The first step is to ask yourself what you want to save for and why. Is it a short-term goal like buying a new piece of furniture or planning an upcoming trip? Or is it a long-term goal like buying a new home or saving for retirement? Whether short-term, long-term or somewhere in between, the first step is to decide the current plan and set a target to save.
We recommend prioritising your emergency fund before any other goal – so you don’t suffer from any financial setbacks while living life. That can be your first goal if you’re struggling to find where to start. After identifying a goal – you can create a customised plan to get you there.
Creating a savings timeline can help you keep on track and see your progress as you go. This will motivate you to work towards the goal and prioritise your funds actively. Timelines can be simple – for example, say you’re going on a holiday in a year and want to have a certain amount of spending money. You can set checkpoints with dates to avoid losing track of more complex goals (like retirement). For example, you may want to have around $50,000 in your retirement savings by the time you reach 35.
Monthly goals are another way to map out your goal. This is pretty straightforward but will be easier with a financial advisor by your side to help calculate the contributions you want to make on a month to month basis.
2. Have a hard look at your finances
Once you’ve determined your goal, you can have a hard look at your finances to double-check the goal is achievable in the timeframe you’ve set out. Calculate your monthly income, benefits and any other income you have. Have a look at your finances to see how much can go towards your goals.
You can then reduce any unnecessary spending to put more money into your goal. Try to identify your needs and wants and then limit the wants to a smaller spending amount. Your needs include your housing and food, and your wants are things like dinners out, shopping splurges and subscriptions. If you aren’t sure how to budget for this, you can look at the 50/30/20 budget style as a basis and then edit it to fit your lifestyle.
3. Track Track Track
Keeping track of your income and progress is essential for you to see where you stand and celebrate your progress as you go. If you can tangibly see your success as you go, you’re more likely to continue to do good work. Breaking down goals into smaller goals can make them feel more manageable and not as overwhelming as you start.
Once you have this knowledge and the system down, you can start working towards bigger and better goals to set you up for more freedom with your finances and start living your life guilt-free. If you have any queries, don’t hesitate to reach out to us here.