How to set realistic savings goals

When putting money away in a bank on a regular basis, with no set plan as to what the money is for, makes it easier to withdraw it for a variety of reasons. You see a pair of shoes you like or maybe you fancy going out for a meal with the family. Whatever the reason, the money is sitting there and as we have no plan for it, it makes it easier for us to spend because we haven’t set it aside for a specific reason.

Picking a specific reason for saving your money and putting it away with the intention of using it for that reason makes us think twice about spending it on an impulse purchase, maybe your saving for the deposit for your first home or that dream holiday you have always wanted, or maybe to pay of that credit card debt. Whatever your reason for planning to use the money, once you have a specific reason it gives you something to aim for.

Create a timeline of when you want to achieve your goal. This will force you to put in certain amounts in, to reach your goal and it will make it feel more real and less of a good idea that would be nice if you achieved it. Work out what you need to put in each month to achieve your goal in the time frame of a year.

You will need to set aside the money from your own monthly budget, some employers may deposit part of your salary directly into a savings account if you ask them, or you can have your bank automatically draft an amount into a savings account on payday. This will make it feel like just another bill coming out of your account and you will be able to carry on spending like you normally would.