An important part of an effective budget is to set goals and use them to help you achieve your savings. Your goal could be something as simple as saving enough money for tickets to a football match or concert or, even as big as a new car, house or university. Budgeting makes it much easier to establish both long and short term goals whilst also allowing you to track your progress towards them.
Setting yourself financial goals is a very important factor when it comes to managing your money wisely and it will establish a framework for your savings and spending decisions. If you’re one of those people who are just terrible at saving, then check out this guide by the Money Advice Service on how to get into the savings habit first.
If you want to save for a specific item, then it is vital that you think about your budget. It is no use planning to put a couple of hundred pounds away if you only have pennies left of disposable income after you have paid all your bills. This will only discourage you, if you don’t hit your target.
Write your goals down and then start dividing this by the amount of money that you think you can save each month. You should do this because it will give you the number of months or years that it will take you to reach your goal. Make sure you find yourself the best bank account too because if you leave your money in your current account you are very likely to dip in and out of it. Open a specific bank account for the money that you want to save.
If you are planning on putting away a set amount of money each month then you should consider setting up a standing order so that this way, the money goes directly into your savings. This is going to stop you from getting towards to the end of the month and spending it on something else.
With all this saving there is a high chance that your financial position will change and the amount of money that you are saving will probably change too. An example of this would be if you get a pay rise in your job, if this happens then you should adjust the amount of money that you put away. This means that you more than likely won’t notice the difference. You should also check that the goal that you are saving for is still going to give you the best result that you could hope for.
Remember, there will be lots of unplanned life events that could crop up now and again that could put a pause on you completing your goals. So get that emergency fund going so you have yourself a backup plan.
Stuck on what sort of goals to set yourself? The Readers Digest have put together 6 tips to set and meet your savings goals, check them out and give them ago.