Written by Compare the Market

What’s our number one goal? To help every Australian make better decisions when researching & buying products that they depend on.

How to create a savings goal

Home > Blog > How to create a savings goal

Compare the Market

Creating a savings goal comes down to three things: you need to know what you want, you need an income, and you need to control your expenses. This is easy enough to grasp, but in practice, it’s sometimes difficult to stay on the straight and narrow.

Indeed, plenty of Aussies find it very difficult to follow through on their savings goals. When asked by MoneySmart.gov.au, regular Aussies who were trying to save money were classified into one of four groups.

You should aspire to be part of either the fast and furious or the slow and steady savers, as their differences lay chiefly in how quickly you need to save. The important thing is to start, and follow through.

What will help you save is a framework to work within. We’re going to describe it below.

1. Define what you want

It’s time to unlock your motivation to save. So, what do you want? Even if it sounds silly or unattainable, what is it that you want? Whether it’s big or small, your goals should be SMART. Make them specific, measurable, attainable, relevant, and timely.

For many Australians the dream of owning a home is their go to goal.

Perhaps you want to learn how to cook.

Try it yourself. Tell your Twitter fans what you’re saving for!

It can be as grand or as small as you’d like, so long as it’s something you can write down. If you’re a ‘dreamer’, you may have spent a lot of time defining what you want, but not a lot of time figuring out how to reach those goals! That’s what step two is all about.

2. Look at what your earn/what you owe (i.e. create a budget)

Now that you’ve defined what you want, it’s time to figure out how you should go about achieving that goal. Everyone’s circumstances are different…but not that different.

Here is what you need to prioritise, in this order.

Minimise debt

If you lack the available funds to make meaningful progress towards your savings goal, then it is time to look at your level of debt. One of the smart things you can do is consolidate your debt. If you have multiple credit cards, move the amount you owe on all your credit cards to a single place, so you have one amount of debt left to pay. Seek advice from a financial expert to learn more about this, and compare credit cards on our site to find a better value product for yourself.

Increase savings

Once your level of debt has been reduced to acceptable levels and you have room to comfortably save, it’s time to turbo-charge your savings.

At this point, it’s a smart idea to create a budget for yourself, so you know exactly how much money you could afford to save each week.

3. Re-establish a timeframe, and set yourself some micro-goals

Set yourself a timeframe in which you can complete this goal. You would have outlined this timeframe in your goal statement earlier, but you’ll have a better idea now if this timeframe is realistic.

Once this is done, set yourself some smaller goals to hit along your journey. That way, you’ll experience small moments of success when you reach these milestones, which should incentivise you to keep moving forward with your plan.

4. Automate your savings

Sure, you could micromanage your savings by doing funds transfers every week. But there is a significant upside to automating your savings activity: using direct debit helps you avoid moments of weakness. If you make it difficult to extract your savings (e.g. you have different bank accounts with different financial institutions), you’ll be less inclined to sabotage your savings by splurging. This helps anyone who belongs to the ‘hit or miss’ crowd buck their tendency to shoot themselves in the foot.

One thing you can automate is a 10% deposit into your savings as soon as you’re paid. That way, you’re guaranteed to save at least a little each pay cycle, and you can always go back after you’ve sorted out your bills to add more to the piggy bank.

Why You Should Always Pay Yourself First https://t.co/7VbGwLu576 #emergencyfund #savingsgoals pic.twitter.com/dCW3JQKhnR

— Amy White (@amysdailyliving) June 1, 2016

5. Track and optimise savings as your circumstances change

Measurement of your progress will galvanize your resolve to keeps saving, and act as an early warning system if you’re falling off the wagon. Whether it’s a spreadsheet, a notebook, or an app like Pocketbook – keep track of your savings, and make sure you’re hitting the goals on the days you designate.

What happens if you miss a goal?

Don’t sweat it too much. It does no one any good to beat yourself up about missed goals. Things change (e.g. income, surprise expenses), so your timeframe is bound to move around a little. Tracking these bumps in the road and responding to them quickly is what this step is all about.

6. Don’t stop at one savings goal – be ambitious!

You could put all your eggs in one basket and save for a single thing, but everyone should aspire to more than one goal. Saving for a home? Make sure you put some money aside for the renovations! Putting money away for the kid’s high school fund? Pocket some for you and your partner’s 10 year anniversary as well!

Because once you achieve your goal, you should make the next one bigger and better than the last.

Related Posts