Setting Your Savings Goals
To help you begin your saving journey, we've gathered some advice about setting savings goals that could be really helpful.
Your savings goals should be SMART: Specific, Measurable, Achievable, Relevant, and Time-bound. This means you need to know exactly what you're saving for and why (specific), figure out how much you need to save (measurable), make sure it's something possible to achieve (achievable), make sure it matters to you and your situation (relevant), and set a realistic deadline to reach your goal (time-bound).
'Security' - Your First Goal
When you're just starting to save, you might want to save for something fun or cool, like the latest gadget or a dream vacation. But unexpected bills and emergencies can pop up and make it hard to keep your savings for those fun things. That's why your very first savings goal should be 'security'. Aim to save enough money to cover three to six months' worth of living expenses. This will help you handle surprise bills, car repairs, or times when you might not have income.
The amount you save will depend on your situation, as well as how many months' worth of bills you want to cover. Once you've reached this goal, you can start saving for other things, knowing you have a safety net for unexpected events. As you save for other things, try to keep adding a bit to your 'security' fund. This will keep it growing and protect it from rising prices (inflation).
'Fun Coupon' - Enjoying the Good Stuff
Now that you have your security fund in place, you can start putting aside more money for your short-term goals. These could be things like vacations, new gadgets, or gifts. I like to call these goals 'fun coupons' because they're for things that bring joy to you and your loved ones in the near future, like during holidays or birthdays.
'Dreams Fund' - Making Big Goals Real
While you're saving for your security fund and 'fun coupons', try to also save a bit for your 'dreams fund'. This is where you save for those big goals that might seem expensive or hard to reach. These could be things like an amazing trip to Disneyland, buying a home, improving your house, redesigning your garden, traveling the world, or taking a special course.
Everyone's dreams are different, but saving money can help you make them come true. So keep saving and watch your dreams get closer and closer to reality!