Yahoo Finance 5 brilliant ways to hit your savings goal
Do you want to buy a house, go on a (domestic) holiday, or simply have enough cash stashed to get those dents in your car fixed without it breaking the bank?
Or has Covid-19 seen you lose your job, and shown you the importance of having a hefty emergency fund to see you through a period of unemployment or a loss of income?
Then this is for you.
Building up your savings can be tough, particularly when we’re in a recession, but there are a few ways to hit your goals regardless of the climate.
“Designing and sticking to a savings strategy requires a change in mindset and the formation of new habits,” said Money.com.au spokesperson and financial adviser Helen Baker.
Also read: Simple hack to bank an extra $5k each year
Also read: The 28-day Millennial Money Challenge: Do it if you dare
“The first few weeks might be challenging, as it requires some sacrifice, but it soon becomes a ‘set and forget’ component of your financial life that brings a strong purpose and peace of mind knowing that you will face certain challenges and can work towards particular goals without facing a financial crisis.”
Here are Baker’s five brilliant tips for reaching your savings goals.
1. The 50-30-20 strategy
You’ve probably heard this before, but the ‘simple yet effective’ 50-30-20 budgeting strategy will see you hit your savings goal in no time.
The method sees you split your after-tax income into three categories: must-haves, wants and savings.
Half of your income is dedicated towards your must-haves, which are things like rent, bills, groceries and insurance.
Then, for the fun part, 30 per cent is dedicated towards your wants. That’s things like fashion, entertainment and dining out. Set aside the remaining 20 per cent for your savings.
Anything you have left over that you don’t spend in the must-haves and wants categories can go straight into your savings at the end of the month.
2. Remove spending temptations
If you know you like to online shop when you get home from work, it might be time to engage in a phone-ban, or schedule a Netflix hour with your family or friends.
“Know your spending weaknesses and remove the temptations that take advantage of them,” Baker said.
“For instance, unsubscribe from shopping websites e-news if you are an avid online shopper. Or leave your credit card at home (rely on your debit card) when you are out shopping or dining, so that you spend only a pre-planned amount.”
3. Avoid impulse buys
If you’re anything like me, you can’t resist a bargain shop when you’re bored. But, while you might think you’re saving money doing it, you’re still spending.
A good way to cut this out is to enforce a waiting system to prevent this.
“This tactic ensures you to take a step back – even for an hour – to assess whether the transaction is really worth it,” Baker said. “If you are trying to form a new habit and the temptation is very strong, you might benefit from implementing a 24-hour or week-long waiting period.”
If you still want it at the end of that period, then buy it. But don’t go above your 30 per cent spending threshold for this category.
4. Create a bill calendar
It’s likely that your phone bills, energy bills and rent payments come out at the same time every time, which is a good thing.
Baker suggests you outline all your bills in a spreadsheet, and make a note of when each bill is due. Then, group your bills into categories of under $100, $100 to $500 and $500-plus.
“Smaller bills, such as mobile phone plans or other monthly service utilities, can be paid by setting up automatic payments,” Baker said.
“Larger bills, such as tax, rent or mortgage repayments, require more diligence. It is also crucial to pay substantial bills on time to avoid incurring a bad credit rating.”
5. Lock your savings account
This is as simple as it sounds.
“To reduce the temptation to dip into your savings, ensure you cannot access it through your phone banking app,” Baker said.
This one might mean a trip to the bank to set that function up, and it will likely mean you have to head back to the bank to unlock it again – which will hopefully deter you from actually doing it.
If you don’t have this option, Baker suggests you choose a savings account that charges withdrawal fees.
“The harder and more expensive it is to access this account, the more likely you are to realise your savings goals.”
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, economy, property and work news.
Are you a millennial or Gen Z-er interested in joining a community where you can learn how to take control of your money? Join us at The Broke Millennials Club on Facebook!
