Setting Savings Goals

Most of us have at least a vague idea that we should be trying to save more money. But as with every goal we set for ourselves, the more concrete those goals, the more likely we are to be successful in achieving them.

You might have come across the ‘SMART goals’ concept before – it’s used a lot, and for good reason. Here’s how you can apply it to planning your saving.

Specific

A successful savings goal will be as specific as possible: not just ‘I will save money’, but ‘I will save up for a new laptop’, or ‘I will save for Christmas’ or ‘I will save to pay off my mortgage early’.

You’re likely to have a few different goals in mind, some further in the future than others.  If you can, it’s a good idea to keep separate savings ‘pots’ – and give them names to help you keep your goal in mind! Some banking and saving apps (like Chip) make this super easy.

Measurable

Measurability is another key aspect of successful goal-setting – and it applies perfectly to financial goals. How much do you need to save? Set a target for each of your savings pots. Again, some apps allow you to record your target – and track your progress towards it.

Time-based

OK, you might have noticed we’re looking at these somewhat out of order. But when it comes to planning your saving, the time you have available is almost as important as the amount of money you have available. When are you hoping to buy your new laptop? How many months until you need to start Christmas shopping? Set yourself a savings deadline.

Achievable

Now divide the amount you’re hoping to save by the number of months until that deadline (or weeks, if you’re paid weekly). How much will you need to save each week? Is that achievable, given your budget?

Realistic

Saving a certain amount of money each month might be achievable in theory – but is it realistic? Have you accounted for one-off expenditures that might limit your ability to save? What if you have a financial emergency one month?

If your savings goal isn’t both achievable and realistic, you probably need to readjust it. Maybe you need to opt for a cheaper laptop or budget a little less for Christmas presents. If you’re saving for a big goal – like paying off your mortgage early – maybe you’ll need to allow a little more time to save.

Once you’ve got your goal(s) all planned out, it’s time to find the best way to save. Check out our article on making your savings work harder for you