Everything you need to know about setting a savings goal
Saving is hard but it’s made a whole lot easier by setting goals. It’s proven that people who set a savings goal actually save faster than those who don’t. No matter what you’re saving for, it’s important to set a target from the beginning.
Follow these steps so you have the foundations to start saving like a boss 💪.
1. Define your savings goal
What is your savings goal? It might be a house, a car or a holiday or it could be something smaller like a rainy day fund or some new headphones. If you name your goal you’ll reach it faster, research by NS&I shows that people who set their savings goal, save faster and up to £550 a year more than people who don’t.
2. Decide how much you want to save each month
Deciding how much to save each month depends on what you’re saving for, how much you can commit to putting away each month, and how quickly you want to reach your goal.
Let’s say you wanted to save £1,000 for a holiday in 8 months, that would mean saving £125 each month. Or if you wanted to buy a pair of £120 trainers in 3 months, you’ll need to put away £40 a month. It’s a balance between what you can afford and how long you want to save for.
If you want to save money faster, you’ll need to increase your payments and reduce your timeline.
3. Set up a savings account
Open an easy access savings account then set up a direct debit to transfer into your savings account each month. It might be better to do this straight after payday, so you don’t forget later on in the month.
Top tip: It’s probably quickest and easiest to open a savings account with your existing bank account.
4. Watch your savings grow 📈
Once you’ve got started on your savings goal, you can look into getting them to grow faster. The best place to keep your savings depends on how much time you want to spend reaching your goal and how much risk you’re willing to take:
- For anything on a timeline of under 5 years, you want to use a savings account, term deposit or a cash ISA
- For a medium goal (between 5 – 10 years), use a savings product, or you could consider investments depending on your goals and risk appetite
- For a long term goal, you should consider investments like shares, bonds or funds that tend to provide protection from inflation over the long term. If you want to start investing, check out our beginners guide here.
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