Putting aside money can be easier when you have a roadmap for where you want to go. Whether your goals are big or small, short-term or long-term, making a plan can actually help you save more. Here are a few important steps you may consider taking on the way to reaching your goals.
What are you saving for—a vacation, home, or car? The first step to successful saving is identifying your goal. That step can give you something concrete to work toward. Some people sit down at the start of every new year to write down two or three things they want to save for. Others identify new savings goals throughout the year, whenever inspiration strikes. (Tip: Try keeping your list on your smartphone so you can refer to it and remind yourself of your priorities at any time.)
Once you’ve named your goals, consider setting up a separate savings account for each goal. (Look for high-yield savings accounts—often found at online banks—to help your savings grow even faster.) Give your savings accounts goal-specific nicknames like New Kitchen Account, or Dream Vacation Account. Naming your separate accounts can help you stay connected to your goals and be more motivated to reach them.
Whether it’s a new kitchen next year or a vacation in two years, it can help to establish a timeline and set milestones to track your progress. When you reach one of your savings milestones and see the money in your savings account, take a moment to congratulate yourself—and then keep saving toward your next milestone.
How much do you need to save every week, or month, to meet your goal? Where will you find the money? Consider examining your budget for areas where you can redirect funds from spending to saving. Look at your discretionary expenses as potential sources for funds. For example, could you downgrade your cable TV package to a smaller one so you can upgrade your savings? Another good idea: add any unexpected windfalls, like a tax refund or work bonus, to your savings account to help reach your goal faster.
Think about setting up automatic deposits from your checking account into each of your savings accounts online. Automating deposits is a great way to avoid having to remember to do it yourself. What’s more, if you never “see” the money, you might not miss parting with it. In fact, studies have shown that people who split their direct deposit paychecks into different accounts find it easier to put money aside.* We call this method “paying yourself first”—helping to ensure that you fund your goals before you have a chance to spend the money on something less important.
Everyone has goals, dreams and wishes for the future. Turn your goals into action by making a plan and consider following these simple steps to make saving easier.
* Direct Deposit Survey, NACHA and America Saves, April 2016