Setting a specific savings goals is the easiest way to help you start saving money. Simply depositing your hard-earned cash in the bank only makes it easier to withdraw when you want to purchase something or to simply overspend. This is why it’s crucial for you to save for a specific reason, whether you’re working towards several goals or focusing on a single goal that you’re eager to accomplish – and so we listed down some tips on how you could do just that.
1. Select a Specific Reason to Save
The first step to reaching your savings goals is to determine what you’re saving your money for. It can be for a dream vacation, a down payment for your home, or the payment for a car. You could be saving for all these reasons. Once you’ve decided on what goal you’ll be saving for, you now need to determine the amount of money you need to reach that goal.
2. Make a Timeline for your Savings Goal
After determining what your savings goal is, as well as the amount of money you’ll need to reach that goal, it’s now time to create a timeline for that goal. A timeline will help in giving you additional motivation to meet your savings goal. It can be as simple as going on a vacation in a year or preparing the down payment for your house in two years. Goals like an emergency fund or saving for retirement, on the other hand, require you to set benchmarks and dates when you should achieve them. By the time you reach the age forty, for instance, you might already want to have at least S$50,000 in your retirement savings account.
3. Set a Monthly Savings Goal
For you to be able to closely follow your savings goal timeline, you need to determine how much money you’ll need to save every month just to reach it. This should be easier to calculate for most of your goals, except for your retirement account. If you’re thinking of saving for your retirement, carefully consider your contributions and rate of return before setting a monthly savings goal for it.
4. Use the Right Savings Tool
Apart from having a timeline for your savings goal, you should also find the right type of account to use for your savings. If you’re planning to save money for more than five years, then you should look at opening mutual funds. Money market accounts through your credit union or your bank also offer good rates of return. Knowing what tool to use for your savings goal will definitely help in making the process of reaching it a lot easier.
Setting and reaching your savings goal isn’t as difficult as many people think. All you’ve got to do is determine the goal you want to achieve, set a timeline when you want to accomplish it, and you’ll be able to enjoy your savings sooner than you might have thought.