Savings goals can seem like one of those magical things that can never be reached. They seem so difficult to get to and so BORING to save for. This may be true, but secretly I love saving, and the reason that I love it, is what that stack of cash allows me to do when I’ve finally got there and I do get all the way to my goal. I’m a goals person. I love the satisfaction that comes with reaching them, and I just feel more grounded in having them. Today I wanted to share with you how you can create a savings goal and stick to it.
When it comes down to the nitty-gritty of it, saving for something is, at least in part, all about mindset. If you don’t believe you can or you just really don’t want to, then you probably won’t. It’s a harsh truth, but I think it needs to be said, before we get down to how we do it. Saving doesn’t have to be boring or difficult if you set yourself some ground rules first and make sure you really, really want the thing you’re saving for. Here are the questions you need to ask first:
What do you want to save for and why?
This seems ridiculous, but being very clear on it, will help you on the days you want to pack it all in. Why is this thing so awesome that it’s worth having or doing. When I saved $18,000 for my North American trip, I knew I had to save for it because I just had to go away and get some fresh perspective and see the world. It became a need for me rather than a want, and that made all the hard days of saving that little bit easier.
How much will you save and how often?
I’ve saved for lots of different things, and I usually try to save a percentage of my income rather than a fixed amount each week, which is better for me as my income is different from week to week. I started at 18 saving just 10% of any incoming money, be it $2 or $200. Every little bit counts. When I was earning more money and I really wanted to save as quickly as I could, I saved 50% of the incoming money and left the rest to cover bills and outgoings. I don’t recommend such a high percentage of savings if it forces you to stretch what you have too far. It’s not meant to make your life miserable whilst you’re saving. I was in my early 20s and didn’t have all that many outgoings. If you’re on a steady income look at what you reasonably can save and make sure that it doesn’t cause money stress. Also think about how often you can put the money away. I liked to do it as soon as the money came in, so I didn’t get tempted to spend it. High interest savings accounts linked to your regular accounts are great for this.
What are you willing to sacrifice?
This is where you need to be honest and realistic. Can you cut out the 3 takeaway coffees a day that cost you $3.50 a time? What about those snacks that you just pick up on your break even though you’re not hungry? Could that money be saved towards your goal? If you’re a serious spender, what from that could you cut out in order to save for your big goal? I really struggled not to buy all the books when I was saving. I really had to come back to my why quite often – but it was so worth it!
What will your savings targets be and what will you reward yourself with?
This is the most important part of sticking to a savings goal, the reward levels! When you’re saving for something big, this is non-negotiable. You need to choose what percentage of your goal saved will allow you to treat yourself for being such a good saver. I’m sure it seems counter intuitive, but stick with me. Say you choose 25%, 50%, 75% and 90% (because that last quarter can be tough). Think of something small, or something that you sacrificed that you can have as a treat. Say you gave up going to the movies regularly, treat yourself to that and do a fist pump because you’re so awesome at saving now.
Once you get into a habit of saving, it becomes less difficult. If you can share your savings journey with someone who’s got your back, even better. I found it much easier to save that crazy about of money, when I not only keyed my new deposit amount into my spreadsheet, but also shared it with people who were excited at how well I was doing to get there. Every time that percentage saved jumped on my spreadsheet from a deposit I saw how much closer to my goal I was, and that spurred me on to get even closer. If your goal is a really big one, be sure to have 2 decimal places showing at the end of your percentage, so even if your deposit doesn’t bring it up a full percentage point, you can see that it’s growing.
If it’s a trip or a house or something that you can get an image of, that you’re saving for. Consider printing a photo either of it or of something to represent it. Stick it to the fridge or on your wall where you work. Having a visual reminder of what you’re working for will also help. Remember to be kind to yourself, and if the numbers just aren’t adding up one month, then it’s ok not to save as much (or if necessary, at all). If it’s not working at the speed you had hoped, consider extending the time frame to get to your goal. Taking that pressure off is not a failure, but something that will make you happier in the long run.
Have you tried something like this? How do you save? I’d love to hear about it.