Five Tips to Meet Your Targeted Savings Goals
By Kevin Gibbons
An objective without a goal is just a dream. There is a desire for an end result, but no path on how to get there. Setting a clearly defined goal both clarifies what it is you want to achieve and sets the roadmap for how you will get there. What makes a good, achievable goal?
1. Have a Specific Target!
Know how much money you need and have a specific goal you can visualize. Don’t “save for a vacation.” Save $3,500 for a luxury 10-day trip to Italy, with stops in Venice, Rome and Florence. This ensures you have enough money for the goal, but don’t delay longer than necessary by saving too much money. It also gives you a much anticipated focus.
2. Set a Realistic Schedule
You want that money saved by a certain date. Sticking to the same example, people never take a vacation “someday.” You want to take your vacation July 17, 2025. That means you need to purchase your plane tickets by May 24, 2025 (side note, most travel studies say the best time to buy international plane tickets is on average 54 days beforehand, but check resources). So you need to save $68/week between July 2024 and July 2025. (That’s not so much for a trip to Europe, is it?)
3. Set up a Dedicated Account
If you are very disciplined, you can track your savings on a dedicated line in a spreadsheet. However, we strongly recommend you save to a dedicated account where it is a little difficult to get immediate access to your savings. This keeps you from “borrowing” to cover incidental expenses. Banks like CapitalOne360 have Internet banking services that let you establish multiple accounts with very small initial balances and no extra fees.
4. Give Yourself Strong Visual Reminders
Put up a picture of the Roman Coliseum or that dream home remodel in your office or room where you can see it every day. This reminds you what you are saving for when you feel like spending on something else. One of the strongest aids we have found is to put a small Post-It(TM) note with your goal written on it on your debit or credit card in your wallet. Every time you pull out that card for a purchase, you are reminded of your big savings goal. Then you can decide if that purchase is really worth it.
5. Prioritize Multiple Savings Goals
We can get distracted and frustrated when we are presented with too much information or too many options. If you are saving for multiple goals, clearly write them down, with the dollar value needed and the schedule. Then make a plan for allocating your available savings and stick to it. If you do this once, then your savings will be automatic and you won’t be struggling to juggle which goal you are saving for in a given week or month. You will make the progress that you planned on all of them.
By following these tips, you can move your objectives past the “dream” stage and into the “goal” stage, where you will actually be able to attain them. You will have a clear idea of what you are working towards and know the steps that will get you there!
Kevin Gibbons is a cash flow planning expert, partner of The Savvy Life and co-author of the international bestseller Living The Savvy Life.
For the past 10+ years, he’s worked with over 800 individuals and families to create Spending Plans.
To learn about the Spending Plan process, visit The Savvy Life’s Home Page. If you’d like to learn about how The Savvy Life works with financial advisors and their clients visit: The Savvy Life Advisor’s Page.
