Savings can feel intimidating, especially if you're starting from scratch. From setting your savings goals to begin with, to providing tips on how to meet them and stick to them - this article can be used to help get yourself into prime position to set up a more secure financial future.
Setting aside money to save could bring you a level of financial freedom. By putting money away regularly, your savings pot could help you to achieve your goals. But the first step is setting your goals.
1. How do I set savings goals?
First things first, sit down and think about what saving goals you’re aiming for. Here are a few considerations.
Write down your goals
Physically writing out what you want to achieve can help you to see the bigger picture of your aspirations, and make it feel more real. Are you saving for your family, retirement, holidays, a house, an emergency fund or a car? Remember to keep in mind what brings you joy and purpose too as saving for these things can be a powerful motivator.
Make your goals specific and realistic
General statements like ‘I want to save more’ or ‘I need to spend less’ are too vague to stick to. They make it too easy to create lots of ‘exceptions’ that knock you off track. Setting specific goals could help you work towards achieving a clear fixed target. For example, ‘I want to save £1,000 in the next six months’ or ‘I want to halve how much I spend on takeaways for the rest of the year’.
It's also important to make sure your goals are realistic and achievable – setting too ambitious goals that you’re unlikely to reach could be disheartening.
Split your goals into the short and long-term
A short-term saving goal could be building up a rainy-day fund so you could pay your bills if you lost your job. A longer-term goal may be saving up a deposit for a house or reviewing your monthly pension contributions depending on when you would want to retire. You don’t have to wait to complete your short-term goals before you start your longer-term goals.
Think about how your goals would fit in with living a longer multi-stage life
As we’re starting to live longer, saving for your later years might be something you want to give some serious thought to. For example, are your retirement savings right for you and the lifestyle you have in mind after work? Or do you need to put some money aside for health care? No matter where you are in life, we've put together a list of financial tips for every stage, helping you better prepare for the future.
The dynamics of how we live are changing too. We’re moving away from the traditional three-stage model of ‘education, employment, retirement’ to living more varied and flexible multi-stage lives. No longer are life stages defined by our age, but more by our decisions on how we spend our time. You might choose to go to university in your 40s, or maybe decide not to retire at all. We've also put together an article all about what a multi-stage life might mean for you.
What to do if you have too many goals
Sometimes setting too many goals can be overwhelming and slow your progress. If you find that you have a long list of goals and can't quite meet all of them right now, you could add these to your long-term plan. You might decide to start saving for something in a few years rather than right now. It all depends on what’s most important to you and the money goals you’d like to achieve first.
2. How do I meet my savings goals?
So you’ve written down your money goals, but how do you actually achieve them?
Begin with the end in mind
Planning is important to stay on track. Once you’ve chosen the financial goals you want to achieve, work back from there. Decide where you want to be financially, set a future date to get there, and track back to where you are today. Setting milestones along the way might help, especially for those long-term goals.
In the episode How to connect with your future self of the Money:Mindshift podcast, we learn that by connecting with our future selves, even by writing a letter to them, we can get a better picture of what we need to do to reach our savings goals.
Consider which goals you need to achieve first
You might have lots of money goals, but some may need your attention first. It’s essential to recognise those and separate out what’s important from what’s urgent. Debts can often be a pressing money issue and is something to stay on top of. Our article Should you prioritise saving or paying down debt? shares some ideas for you to consider. If you need help with this speak to a financial adviser. You can find a financial adviser near you, on MoneyHelper’s website – there may be a charge for this.
Understand how much you need to save each month
As mentioned, you want to make sure your goals are achievable. So, think about when you want to achieve your goal and how much money you’ll need to save each month to meet it. It's also a good idea to track your monthly outgoings, so you know exactly how much you need in your account to meet important payments.
Remember to try to keep some money aside to enjoy yourself too while you’re saving. Sometimes a little treat is just the motivation that can be needed to keep yourself going. If you need to find new ways to save money, check out our article how to save money – ideas and everyday tips.
Choose where you’re going to save your money
It’s a good idea to consider where you’ll put your savings. There are a range of different types of savings accounts – so do your research on which ones are best suited to your needs and goals. If you’re considering investing, bear in mind that the value of an investment can fall as well as rise, and isn’t guaranteed. You could get back less than you invest.
3. How do I stick to my savings goals?
Now you’ve started saving towards your money goals, here are some things to consider to help you stay on track.
Be proactive
Getting started is just the beginning, it’s important to stay on top of your goals and the milestones you’ve set. Not only will this likely help you to achieve them, it could avoid bigger problems from building up. To help you stay on track, you could consider setting up a standing order, so the money is automatically allocated to your savings pot. And if it helps, mark off a countdown on your calendar to keep you motivated as you get closer to your goal.
Review your goals
Things change and so can your goals. As we start to live longer multi-stage lives, you might find that you need to adapt what you’re saving for, or working towards, due to a change in your circumstances. Similar to our article How to review your budget, you might find it useful to check in on your goals mid-way through the year.
Be cautious
Achieving your money goals can require patience. Being realistic about how long reaching each milestone might take is a key part of meeting your targets – and there are times when you might want to give up. At these moments ‘get rich quick’ schemes can seem attractive solutions but they never are. Read our 6 simple steps to help protect yourself from pension scams on our money tips hub.
Get started with your saving journey
Whatever your money goals are, the first step forward is to just start. There's nothing wrong with starting small, just make sure your targets are achievable and based on how much you can genuinely afford each week or month.
For more tips, inspiration and articles like this, check out our Money:Mindshift hub.
This article isn’t intended as financial advice.