Reaching Your Savings Goals
Want to hear something obvious? It costs money to do cool stuff. Whether you want to save money for a trip to Japan, for a down payment on your first home, or for that straight-from-a-magazine wedding venue, you are probably going to need a well-funded savings account. And for most people, that means implementing and sticking to a savings strategy.
Savings goals don’t just reach themselves. Saving requires hard work, a plan of attack, and diligence. (Although, that won’t stop us from dreaming about that long-lost and benevolent great-aunt who we’ve never met and who is leaving us a surprise inheritance.)
A good first step to saving money is defining your savings goals. What is that you’re working for? Then, it’s time to implement a plan. Third (and this part is the hardest) continue to put in the work.
Reaching savings goals takes time and effort, but with a few tried and true strategies that work for you, it doesn’t have to be hard.
In fact, reaching your savings goals may feel incredibly rewarding and totally worth the effort.
Because living your best life probably requires having money saved, here are some strategies you might find helpful when trying to reach your savings goals.
1. Identifying Your Goals
There are some savings goals that are nearly universal, like retirement and an emergency fund, and others that will be unique to you. Everyone’s finances and goals are different! Before you can start reaching your savings goals, you should probably identify what they are. This is the fun part—you may want to spend some time dreaming and planning here.
Next, list those goals in order of priority. Keep in mind, priority doesn’t necessarily mean which happens soonest (although it could). For example, even though retirement is far away, it will likely be the most expensive savings goal a person will have during their lifetime. Therefore, it may rank higher in priority than other savings “wants,” such as a new television or an exotic vacation.
Because many people won’t be able to save for each of their big goals right away, ranking them in order of importance can help you determine which to work on first.
2. Determining Monthly Amounts
This is an exercise that may seem obvious, but it can also be completely eye-opening. First, list out your top two or three financial goals. Next, think about how much money you need to accomplish this goal and the time frame, in months, for accomplishing the goal. Then, divide the former by the latter.
For example, a person wants to save $6,000 for an emergency fund in one year (12 months), $10,000 for a wedding in four years (48 months), and $20,000 for a down payment in six years (72 months).
By dividing the savings goal by the number of months, we find they need to save $500 per month for their emergency fund, $208 per month for their wedding fund, and $278 per month for their down payment.
This may be another exercise in prioritization, helping you hone in on what to focus on first.
3. Writing Down Your Goals
There are studies that show that people who write their goals down greatly improve the chances that they’ll succeed at those goals. There could be a few reasons for this.
First, it could simply serve as a practical reminder that you have goals to work toward. You can give yourself an extra visual cue by posting the goal somewhere that you’ll see it often, like on the fridge.
Writing down a goal may also help connect the creative, thinking part of the brain with the action-oriented and pragmatic parts of the brain. To translate your savings dreams into reality, an important step may be getting as many parts of your brain and consciousness involved as possible.
You may find it valuable (and fun) to take this idea a step further and create a vision board or draw out your goals.
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4. Tracking Your Progress
There’s an old saying that goes “what gets measured gets improved.”
If you truly want to get better at spending and saving, then you may want to track both your daily spending habits and your long-term progress on your savings goals. This may feel difficult at first, but as with most things, it becomes easier with practice and as you hone the methods that work for you.
With daily or weekly spending habits, there are lots of ways to track how you’re doing. If you don’t know where to start, there’s always the old-fashioned way—with a pen and paper. This is a great way to really wrap your head around where your money is going, and the act of writing down each “spend” may actually help you to spend less. Or, you could use an Excel spreadsheet or Google Sheets.
With savings goals, it is also possible to track your progress via pen and paper, using a spreadsheet, or in a more creative way, such as coloring in a drawing of the things you are saving for.
If manual tracking isn’t your thing, you might consider leveraging technology via a tracking app like SoFi Relay. SoFi Relay connects your bank accounts on a mobile dashboard, so that you have access to a holistic view of both your spending habits and your progress on your savings goals.
5. Celebrating Small Successes
To help avoid savings fatigue and to keep the fire burning, don’t forget to treat yourself along the way. Positive reinforcement might be an important element to your success.
How might you do this? You don’t have to wait until you’ve reached your big goal to celebrate—you can give yourself some love throughout the journey. For example, if the goal is to save $10,000, then celebrate when you hit $5,000 in addition to when you cross the finish line.
Celebrating can be as simple as treating yourself to a hot chocolate or the fanciest coffee in town, but it can help to find a way to give yourself that mental victory.
If you’re like most people, you’re busy and never crazy about taking on another chore. So, what can we do to make saving money less of a chore? One potential way to do this is to automate.
Automating is a simple and powerful way that can help make progress toward savings goals without having to think about it all the time.
To automate your savings, you might set up an automatic payment between your checking account (or wherever your paychecks are deposited) and your savings account. You could select a dollar amount to be sent each month after your paycheck has time to settle.
7. Separating Your Savings
To help you even further with your savings goals, SoFi Checking and Savings® has launched a new feature where you can create different vaults within your overall SoFi Checking and Savings online bank account.
You can customize your vaults with goal-specific names (ex. Travel Fund) so you can track your progress right when you log into the app. Plus, you can set up direct deposits to these specific vaults to automate your savings.
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