Saving can bring you a level of financial freedom. By putting money away regularly, your savings pot could help you to achieve your goals. But how do you set money goals and stay on track to achieve them? Read on to find out more.
1. How to set your 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.
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 and demotivating.
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
Talking about long term goals. 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?
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’s 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.
What to do if you have too many goals
Sometimes setting too many goals can be overwhelming and hinder 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.