How To Set A Savings Goal You Can Actually Reach
Saving money can be like flossing your teeth: you know you’re supposed to do it, but you just can’t seem to make a habit of it.
Turns out that having a clear goal in mind is crucial. Westpac research has found that millennials who had a specific goal were twice as likely to save money than those who didn’t have a goal. It makes sense: while saving for a rainy day is a good idea, it’s a lot less motivating than, say, saving for a new car or a round-the-world trip.
Set yourself up for success by setting yourself a solid savings goal. Here’s how.
#1 Decide what you’re saving for
Maybe it’s a short-term goal, like a mate’s trip to Bali or perhaps you’re looking at something more long-term, like a house deposit. Maybe you want to do both! Either way, the first step is figuring out what it is you want to spend your hard-earned cash on; then figure out how much it’s likely to cost.
#2 Figure out how much you’re going to save
If your approach to saving money is “putting aside whatever’s left over” then you’re playing yourself. So let’s do a little bit of maths, aka budgeting. Pull out your bank statements, and see what your expenses are. And then decide how much of your pay you can put aside as soon as that direct deposit drops into your bank account.
Perhaps you’ve got a deadline for your goal – like maybe you want to go to a friend’s destination wedding in Thailand, or perhaps you want to buy your bestie a killer birthday present. If that’s the case, figure out how many pay cycles you have until the deadline, and divide the cost by that number. That’s how much you need to set aside every time you get paid.
Remember to be realistic. If you’ve been living pay cheque to pay cheque, it’s unlikely that you’ll be able to save 50% of your income. 10-20% is what a lot of experts recommend.
#3 Automate it
Out of sight, out of mind. Or, in this case, out of the daily transaction account, into the savings account, where you’re less likely to touch it.
Set up an automatic transfer on the day you get paid. You won’t miss the money, and you don’t have to remember to do it. This way, reaching your goal will feel effortless.
#4 Have a ‘fun’ budget
Saving money doesn’t need to mean sacrifice, it’s just about having priorities. So make sure you set aside some money for non-essentials: dinner with friends, a trip to the cinema with your SO or whatever it is that makes you smile. Work this into your budget, and there’s no need to feel guilty.
#5 Remind yourself of what you’re working towards
Westpac research found 65% of millennials say they save more if they have a specific goal or target in mind, so it’s clear that goals are integral to good financial health. Having a regular reminder of what it is you’re working towards will keep you motivated.
Perhaps it’s a picture of that shiny new car that you keep in your wallet, or maybe it’s a bank account with different segments named for each of your goals – maybe one named “Italy trip” and another named “House Deposit”, so your goals are front of mind. The Westpac Life savings account allows you to do just that – you can set up to 6 goals and track your progress towards them via the Westpac App. You can save for several goals without the hassle of having more than one account – and you’ll earn a competitive 2.30% p.a. variable interest rate which includes bonus interest every month your grow your balance.
Westpac Life is a flexible savings account that could help you stay on track to meet your savings goals. Open now in less than three minutes.
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