Savings Goal Calculator
Reaching Your Savings Goals
Everyone should have savings goals they are trying to meet. If you have a goal, you're more likely to stay within your budget, and you'll get the peace of mind that comes with knowing that your finances are secure. If you haven't started this process yet, this post is for you. We'll go over how you set reasonable goals and how to stay on track with those goals. We'll talk about ideas that will help you come up with extra money and ways to help you cut your monthly expenses.
Why Should You Set Savings Goals?
If you just put money in the bank sporadically, you'll be more prone to taking it back out for any reason. You may also be more inclined to overspend because you know that the money is in the bank and it isn't be saved for any particular purpose. If you set a goal, this will make you less likely to pull your money back out because you know that this will set you back from reaching whatever goals you set.
Types of Savings Goals
As stated above, if you have a specific savings goal in mind, it is easier to leave the money in the account and not reach for it every time you overspend.
- College Fund. Do you want to go back to school or do you have a child that will likely attend college? If you answered yes, you would want to start saving a college fund early.
- Emergency Fund. If you don't have an emergency fund, it is a good idea to save for one. You're not alone in this, according to a study done, roughly 59 percent of Americans said they don't have even $500 saved in case of an emergency. However, this amount is slowly dropping each year.
- Pay off Debt. If you want to pay off your credit card or student loan debt, this could be an excellent goal. Once you get out of debt, you will be able to use your money for more pleasurable things.
- Retirement. Everyone should start saving for a retirement fund early in their lives. If you start this process, your employer could even match your contributions.
- Vacation. If you've always wanted to take a dream vacation somewhere, this could be your saving goal. You'll be more motivated to leave the money in the account if you're rewarded at the end of this process.
Assess Your Financial Situation
Once you have a goal in mind, take a look at your finances. Calculate all of your monthly expenses and subtract them from all of your monthly income to see what is left. This will give you an idea of what you can afford to put away each month. You should also look into creating a budget because this will tell you exactly where your money is going every month. There are free tools you can use to track your spending, and there are apps if you don't want to do spreadsheets. You should aim for the 50/30/20 rule. This is where you allocate your take home income, and you should put 50% of it into necessities, 30% to wants and 20% to savings. This rule will give you a good head start on your savings goals.
How Do You Set Reasonable Savings Goals?
It is a good idea to set long term goals and short term goals. That way, you can easily keep on track with your saving, and if you notice yourself getting off track, you can correct it.
Create a Timeline
Once you have your finances figured out, create a goal savings timeline. Creating a timeline will give you an additional push of motivation to save each month. A guideline can be simple, for example, say you want to go on vacation in a year or have a down payment on a house saved in two years. These are pretty clear set goals. Emergency fund and retirement goals you want to set a date for and accrue the balance as quickly as possible.
Set Monthly Goals
Once you have an amount and a date set, you have to break it down by months. This way, you'll know exactly how much to put away each month to meet your financial savings goal. The only goal that you might have to switch around a little is your retirement goal, and you'll adjust it accordingly. Once you start to cut back on your expenses, pick one place to keep your money. You want to choose an account with the highest return interest rate, so your money grows a little faster. You may even want to create separate accounts for your different goals.
Follow up Once a Month
To keep yourself on track, set up a night once a month yourself, or yourself and you're significant other go over the accounts and track your savings. Doing this will help to keep you on track, and it will help you catch potential overspending. You should also take this time to go over your budget, expenses, and see how much you've managed to save so far.
How Do you Keep Yourself on Track?
Keeping yourself on track is one of the hardest parts of setting up a savings goal. It is so easy to just dip into your account if you overspend, but this will only make you farther from your goal.
- Give Yourself an Allowance Since you'll be trimming back your spending a lot, give yourself a little bit of breathing room, and give yourself a small monthly allowance. This is the money you're allowed to spend on whatever you want, but once it's gone, you can't spend any more until the next month.
- Make Smaller Sub-Goals Take your large goals and break them down into more manageable pieces or sub-goals. Your sub-goals should be able to be achieved on a weekly or bi-weekly basis. This strategy will make your big goals seem less daunting on a week to week basis.
- Use the Buddy System If you have a friend or family member who is also trying to set goals, use each other for support. It will motivate you to keep saving because your buddy expects you to keep doing it. They can also act as a sounding board if you get stuck.
- Use Visual Reminders If you have kids, wrap one of their pictures around your credit cards. Write something along the lines of 'Does this purchase help them?" on it. This will make you think each time you pull out your card to buy something. You may even find yourself walking away without buying anything.
What Ways Can You Use to Come up With Extra Money?
If you're worried about not having enough flexibility in your monthly spending allowance, there are several ways to make extra money.
- Ask for a Raise. If you've been at your job for a while and haven't gotten a raise, ask for one. Those few extra cents an hour will add up.
- Etsy. If you're a craft person and you like to make things, make an account on Etsy and list your items.
- Get a Second Job. There are always jobs available, and you could apply for a part time second job. This will give you something to put on your resume, and you'll have more money coming in to supplement your budget.
- Online Freelancing. There are dozens of sites that are dedicated to helping freelancers earn money. You research things that you like to do, and there are usually freelance sites for it. If you're good at resume writing, Fiverr is a free site you can post that you're looking for work on. If you like to write, Textbroker and GetaCopywriter allow you to do this.
- Sell the Things You Don't Use. Do you have items around your home that you just don't use? If so, there are lots of ways you can sell them quickly and easily. There are sites like Craigslist and eBay that will enable you to list your items for free. If you'd rather use an app, ones like Letgo and OfferUp are both free and easy to use.
- Sell Your Pictures Online. You most likely have dozens or original photos on your phone. Things like landscapes, sunsets, or just everyday life, and some websites will pay you for the copyright to these pictures. If you're looking for a website, iStock and Shutterstock are good options.
- Utilize Pawn Shops. If you need some quick money and you have something to sell, Pawn Shops are a good choice. They will buy almost anything, and the prices are usually very fair.
Ways to Trim Your Expenses
If you're still worried about not being able to stick to your budget, consider trimming your monthly expenses. There are a lot of things that are more luxury items than necessity.
- Buy Store Brand Products. Name brand items are more expensive, and the store brand items usually work just as well. Start buying store brand items and, keep track of how much this saves you.
- Coupons. If you don't coupon, it is a good idea to look into it. You could save hundreds of dollars each month if you get good at it. Even when you're just starting, every little amount helps, and there on online sites you can print them from.
- Customer Rewards. If you shop a lot at one place, see if they offer a customer rewards program. If they do and you sign up, you can get coupons and free vouchers just for shopping.
- Roll Over High Interest Debt. If you have a high-interest credit card, see if you can transfer the balance to a lower interest card or a card with an introductory 0% APR rate. This will allow you to pay it off quicker.
- Switch to a Cheaper Cell Phone Carrier. There are cheaper cell phone carriers around, and this can save you money if you switch. You can also cut down this expense by switching to a smaller data package or cutting it out completely. You can also get a pay-as-you go phone if you only use your phone for a few hours each month.
- Switch to LED Bulbs. If you make the switch to energy efficient light bulbs, this can easily add up to $20 or more a month in savings.
- Use Streaming Services. Your cable bill can cost you upwards of over $100 each month, and you most likely only watch a few channels. It might help you to get rid of your cable package and switch to Netflix, Amazon Prime Streaming, or Hulu.
- Savings Goal
- Compound Savings
- Don't Delay Savings
- Emergency Savings
- Home Downpayment
- Savings, Taxes & Inflation