At the start of each year, we're prone to compose life-changing plans. As most of you know, those plans rarely give any results. Whether it's weight loss or quitting this or that habit – it doesn't matter. What matters is that people rarely stick to the plans they make at the beginning of the year.
Still, there's no reason to lament over the facts above. We're here to talk business. Out of all new year's resolutions, dealing with your finances might be the toughest one. In the article below, we'll show you how to set savings goals for the annual year.
First things first, ensure you have a clear picture of your finances. Next up, choose your savings goals for 2022. Define what you want to do with that money and set a deadline. Also, consider making separate accounts for each goal you set. Lastly, make sure you keep track of them and automatize transfers to your savings account.
Wondering if there's more to this? Stay tuned to see what kind of advice can Shoppanel's own financial experts give you!
Table of Contents
- 1 Why's it so important to set savings goals?
- 2 How to set savings goals in 2022?
- 3 How to set savings goals in 2022 – a quick summary
Why's it so important to set savings goals?
Well, it would be the same if someone asked why should anyone make an annual financial plan. Of course, the answer's the same to both questions. Annual financial planning provides you with a chance to do a review of your goals and update them if needed. Also, it gives you the opportunity to analyze the progress you've made during the last year.
What if you've never done it before?
It's never late enough to start. You'll want to formulate your goals in order to remain on solid financial footing. Good organization and planning ahead are the most important prerequisites for success.
Can you prove it?
Well, of course! Research conducted by UK's NS&I (National Savings and Investments) tells us this:
- Folks who have set their savings goal save up to £550 ($753) a year more than folks who don't.
- Naming a goal helps you reach it faster. (We'll further elaborate on this in a little while.)
Setting your savings goals motivates you
Knowing exactly how much money a person wants to save is quite motivating. At least that's what some research studies suggest. As you might already know, just having a target keeps your motivation levels high. It fuels you with enough ambition to reach your goal.
You'll have a better picture of how much you really spend
By paying a closer, more in-depth look at your spending habits, you'll do yourself a big favor. Some folks wouldn't even want to know this, since they're afraid of what they'll find out. Anyway, it's very important you plan savings goals, just so you can control your spending. We know it's hard (considering our consumerist society), but it's far from undoable.
Let's give an example of what we're talking about. Imagine this self-disciplinary act: you stop buying coffee on your way to work each day. Even though it sounds a bit ascetic, this could save you up to £40 ($55) each month. Eventually, you'll save around £6000 ($8220) in the next 10 years. Things seem a bit different when you put them in perspective, don't they?
Sharing is caring
This title might be a bit misleading. Let's explain. Once you set your goals, you can share them with your loved ones. It will make the challenge seem and feel "more real". Also, your friends or family members will motivate you to stay on the right path.
It's even better if you're saving together with a partner or friend. The two of you will provide support for each other in order to keep on track. It's always good you have someone to remind you of the reason why you're saving funds in the first place.
Okay, so these were the positive traits of setting saving goals for the upcoming/annual year. Let's see what kind of advice will experts give you concerning the main topic of the article!
How to set savings goals in 2022?
Okay, let's check out the best tips on setting your savings goals for 2022. You've probably experienced how most financial talks can turn dull and quite uninformative. That's why we'll try to be quick and concise!
#1 Ensure you have a clear picture of your finances
This one goes out for everyone, not just the folks planning to save some funds.
Get some pen & paper, or open up a new Excel sheet. Make a list of your saving, debt, and assets to help you "frame" your complete financial picture. This will enable you to make a better decision concerning what you want to focus on in the new year. Also, you'll have a document that's quite easy to update each year.
We also recommend you keep track of your monthly cash flow. It will help you answer certain questions about the kind of mortgage plan you can afford. Or, for instance, the expenses you'll have the opportunity to cut. Also, this will help you handle conversations with pros more efficiently. You'll know exactly what you can afford.
Plan in accordance with your values
Lastly, this has something to do with some of the ideas you cherish. Make a financial plan in accordance with your inner values. For example, this year we'll have to recover from the consequences left by the pandemic. You might want to spend more funds on charity than on leisure. Give it a thought!
Before we start moralizing, let's get down to business!
#2 Choose your savings goals
First things first (when it comes to setting savings goals), you'll need to define what they are. Your motivation shouldn't be just "saving more", it needs to be more straightforward. For example, it might be a vacation you're planning or your kids' college fund. Saving "more money" won't motivate you enough. It's important you figure out what you want to spend it on.
#3 Pinpoint a deadline
Next up, you'll want to create a timeline. In other words: set a deadline for accomplishing your goals. That way, you'll know how much will you have to save each month. For example, if the car you're planning to buy costs $12.000, each month you'll have to set aside $100. If you're planning to buy it at the end of 2022, that is.
Some long-term plans will involve you dealing with bigger sums. Subsequently, you'll have to plan way ahead. That's the case with retirement, for example.
#4 Make separate accounts for each goal
If you're saving for multiple goals, this might be a good option for you. Create separate financial accounts for each goal you've set. This way you can prioritize a certain goal at the expense of others. Also, you'll have a better insight into your savings.
#5 Keep track of your goals
Don't forget to keep track of your goals and celebrate the progress every now and then. Some studies suggest this will greatly encourage you to continue. Once you reach the goals you've set, you'll most likely start creating new ones. The whole process can become quite addictive.
#6 "Dismantle" goals into smaller chunks
Instead of pinpointing what needs to be done, let's give an example. Say you want to save up for a nice little vacation. It's nice and little and, unfortunately, pretty darn costly. We guess you know how hard can it get nowadays. Anyway, you divide the sum into 12 months and it still seems kind of tricky.
Before you think of giving up, you can try dismantling the monthly sum into a weekly rate. A little change of perspective might do the trick. For example, while $400 a month might seem too much, $100 a week sounds more doable.
Consider opting for automatic transfers and deductions. You won't have to think about whether you forgot to transfer some funds onto your saving account. This way, the whole ordeal will be a lot easier.
How to set savings goals in 2022 – a quick summary
Okay, it's time to do a quick checkup. So, what did we learn today about setting saving goals in 2022?
- Ensure you have a clear picture of your finances! This will help you set your focus on this or that in the annual year.
- Choose your savings goals! Define what you want to do with the money you'll eventually save.
- Pinpoint a deadline! Just so you know how much money you'll save each month.
- Make separate financial accounts for each goal! This way you'll have a chance to prioritize some goals.
- Keep track of your goals! Evaluate the progress every now and then!
- "Dismantle" your goals into smaller chunks! You'll see what a little change of perspective can do.
- Automatize transfers and deductions to your savings account! It will make your life a bit easier.
That's about it! Until next time, take good care of your funds!
In need of more money-saving tips? Don't hesitate to follow this link.