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How To Set Savings Goals And Achieve Them
Whatever your dreams are, you need money to achieve them.
To achieve your dreams, you're going to need to plan your way toward them. People who make a plan often reach their goals faster than those who don’t. Plan your goal, calculate how much money you need to save each month, and start saving!
Whatever your savings goal, using a savings growth calculator such as this one can help you determine how long it will take you to save based on your current savings and the amount you add to your savings each month.
Related: 5 Rookie Financial Planning Mistakes That Cost You Big-Time (and what to do instead!) Explained in 5 Free Video Lessons
When Should You Start Saving?
The moment you start earning money, you should start saving some of it for your financial goals. The sooner you begin saving, the more time your money has to grow before you reach your goal deadline.
But before you decide when to start saving, you need to set your goals. You can write down and divide your goals into short-term and long-term categories. Put your list somewhere in your house where you will see it everyday – like the kitchen. No matter how large or small your goal is, if you keep your focus on that goal, you will most likely succeed.
How To Create Your Savings Strategy
- Decide how much you can save each month – Your savings each month will depend on your financial capability and the goals you set. Once you have a clear idea when you'd like to achieve your financial goal, you should slowly set aside a fixed amount each month in consideration of the amount that you need for your goal.
- Cut expenses and increase income as needed – If the money you set aside every month is not enough to reach your desired goal in a certain amount of time, you can either adjust your budget by cutting some expenses or look for additional jobs that can give you extra income – allowing you to allocate more savings every month.
- Try out different scenarios using the Savings Account Calculator – The realization of your goal will depend on how much you can save each month. You can check the Savings Account Calculator to see how long it will take to realize your goal if you maintain the amount you are saving each month.
Accelerate Your Savings
What should you do when you discover that you're not saving enough money to reach your savings account goal in a timely fashion? There are two options here: find a new place to keep your money that offers a higher annual interest rate, or find a way to save more money every month.
The fastest and easiest way to find more money to save is by cutting your expenses – especially if you can't find extra jobs. Along these lines, switching from buying expensive brand-name products to generic products will help you cut expenses. Find out how much money you will save if you apply this strategy by using the Money Saving Calculator – another easy-to-use calculator like this savings growth calculator.
Find The Best Place For Your Savings To Grow
Once you've started the habit of saving, the next step will be to find investments where you can make your savings grow. There are lots of investment products available in the market. But you need to be careful when choosing an investment product. For example, you might not want to invest in a CD (certificate of deposit) if it locks you in for five years when you'll need the money in three years.
For long-term goals, you should consider buying stocks, bonds, mutual funds, ETFs, or other forms of investments that will more likely provide a higher return on your investments than traditional savings accounts or CDs over the long run.
Make Saving A Habit – Even Automatic
The best way to save every month is to make saving a habit. Push yourself to save a specific amount toward your financial goals every month – keeping in mind how long it'll take you at your current monthly savings deposit amount and interest rate. You may need to set a recurring monthly reminder in your digital calendar or to-do list to get in this habit.
Alternatively, try making saving automatic by paying yourself first. Set up an automatic draft from your checking account to your savings account or other investment account at the beginning of each month. Just be sure to revisit these automatic drafts from time to time to make sure you're still saving enough to reach your changing financial goals. As your life circumstances change so must your savings goals.
Remember, saving is an essential component to accumulating wealth. Be smart, create a plan, and stick to it. You'll be glad you did.
Savings Account Calculator Terms & Definitions
- Current Savings Account Balance – The money you already have saved that will be applied toward your savings goal.
- Savings Goal – The amount of money you want to have in the future.
- Monthly Savings Deposit – The amount of money you plan on depositing into your savings every month.
- Annual Interest Rate (ROI) – The annual interest rate or return on investment that you would earn from the account where you're keeping your savings.
- # Months To Reach Savings Goal – How many months it would take you to reach your savings goal taking into account your current savings account balance, savings goal, monthly savings deposit, and annual interest rate (ROI).
- # Years To Reach Savings Goal – How many years it would take you to reach your savings goal taking into account your current savings account balance, savings goal, monthly savings deposit, and annual interest rate (ROI).
Related Savings Calculators:
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- Future Value Calculator: What will be the future value of my savings growth after adjusting for taxes and inflation?
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- Spending Calculator – True Cost To Own: How much does that one-time expense truly cost me over many years?
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