The Accounting and Tax

5 Steps: Saving for a Financial Goal

We are sure that there something you would like to buy or own but you cannot afford it right now. It is also possible that you want to take a trip, do some home renovations or probably anticipating a large expense. In case you are worried about how much it will cost or wondering how to pay off the balance of your credit card, here are 5 steps you need to follow towards achieving these financial goals.

The one thing you need to keep in mind while saving towards a financial goal is that it needs to be a specific goal. You need to find out the exact amount involved and how much per month or period you need to save to achieve the same.

• Step1: Break the big financial goal into smaller chunks

You must realize that the bigger the goal, the more psychologically painful it will seem for you to achieve. Thus you must break it down into monthly or weekly amounts. This will what will make you feel that it is indeed achievable.

• Step 2: Decide Specifically What You Can Do to Save Towards Your Goal

Once you have your goals broken down, decide specifically what you can do to achieve it. So set out the specific plan so that the weekly goal set seems achievable and work towards it. It would indeed be great in case you get your family involved in this financial goal. So each family member could choose their task, to work towards the same.

• Step 3: Find Ways to Earn More

You need to realize that saving is good, but the maximum what you can save is what you earn. If that is not sufficient, then along with cutting down on your unnecessary expenditure you must also work out ways to increase you existing income. So always look for ways to earn money

Ideas for how to increase income include:

1. Picking up an extra shift at work
2. Providing childcare or out of school care
3. Working a second job
4. Renting out a room, a parking spot or the garage
5. Using a skill you have to provide lessons for others
6. Selling your used things which you do not use right now.

• Step 4: Set Your Saved Money Aside in a Savings Account

Once you have saved the money, ensure that it directly gets deposited in your Savings account. Often if the cash remains in hand, there is always a possibility the same gets spent quickly. So in order the same from happening it is always advisable that the amount you have managed to save gets deposited in your savings account.

• Step 5: Always employ the Savings Best Practices

1. Make your saved money hard to get to, e.g. don’t make your savings account(s) easily accessible on your debit card. This also helps curb impulse spending.
2. Avoid friends who spend a lot of money. It’s much harder to spend within your budget if you have such a friend.
3. Unsubscribe from marketing emails from your favourite shops. This way you won’t feel like you’re missing out on a sale or offer.
4. Try not to do too much online shopping. It often leads to impulse buying.

We hope that by following the simple steps mentioned above you would be able to achieve your desired financial goal. But once you have done it make sure you celebrate with family and close ones so that you are motivated again to achieve the next financial goal in line.