by: Alex Thomas Sadler Updated:
The only way to reach your goals is to identify what they are, when you want to reach them and then create a plan of how you’re going to get there.
Setting goals will motivate you to save more
If you don’t know why you’re saving, it gets put on the back burner. And that’s often why so many people end up having to delay big milestones in life — they ignore the most important step: preparation.
So identify what your big goals are and then start taking steps to reach them.
You need to figure out what your priorities are for both the near and long-term future. For example, buying a house, buying a car, a big vacation, emergency savings, retirement etc.
Once you do that, you can create a plan and timeline to keep yourself on track to reach your goals when you want to reach them.
A few goals to consider
If you don’t have enough money saved up to cover at least three to six months worth of expenses, building an emergency fund should be a priority. In the case of a job loss or other unexpected event, this money will allow you to avoid going into debt. You should also have a smaller emergency fund for unexpected expenses, like a car repair or medical bill, to avoid having to cover the cost with a credit card. Here’s a guide on how to start building your emergency funds.
Buying a car or house
Even if these goals are two, three, five or even 10 years away — it’s important to start saving for them now. You don’t want to reach the point when you’re ready to buy a car or house, and then discover that you don’t have the money to do it. So start preparing early!
When preparing to buy a house, get a rough estimate of how much you think you’ll spend and then set a timeline. To get the best mortgage rate, you’ll want to put 20% down. So figure out how much you’ll need to save each month to have enough cash for the down payment when the time comes — and make sure to fit that in to your budget.
The easiest way to do it is to have your direct deposit automatically send that cash to a savings account each month, so you won’t be tempted to spend it and you’ll be more likely to stay on track to reach your goal!
Paying down debt
To be financially successful, you have to get out of debt. If you have credit card debt, paying that off should be your first priority. Since credit cards typically have very high interest rates, the longer that debt sits there, the more money it’s going to cost you — money that could be going into savings.
Whatever your goals are, write them down and put it somewhere you’ll see it — as a reminder of what you’re working for!