Everyone has dreams they hope to achieve one day. However, you need to take action to achieve your dreams.
Dreams Of A Better Life
If your dreams include things like building a more significant savings account balance to fund a better life, those dreams might consist of some of these items:
- Down payment for a house
- Money for a wedding
- College for you or your children
- Your dream car
- A vacation home
Or it may be to ensure you have enough to cover:
- Unexpected car repair bills
- A sudden leaky roof
- Medical bills
Whether it is a savings account to achieve your dreams or a savings account to cover the unexpected, you need to create a plan of action to accomplish the savings goals you have.
How To Achieve Your Savings Goals
Achieving your savings goals starts with a plan. But for it to truly be successful, it needs to be made simple and as automated as possible. Don’t make yourself make the decision to save when each paycheck gets deposited in your checking account, make the decision once and automate it to set yourself up for success.
So let’s break down the steps needed to ensure you reach your savings goals.
- What is the savings goal? Let’s say it’s to save $1,300 to take your family on vacation at this time next year or 12 months away.
- How often do you get paid? Assuming it’s the standard bi-weekly pay cycle, this equals 26 paychecks that you’ll receive over the next 12 months.
- Divide your savings goal by the number of paychecks that you’ll receive in the 12 months that you have to hit your target. $1,300/26 is $50.00.
So you need to save $50.00 each paycheck to achieve your savings goal of $1,300 in 12 months (See “4 Painless Ways To Save Thousands” for ideas to find money in your budget to save). Why did I split your savings goal by the number of paychecks you receive instead of a monthly amount? This method is much easier to automate and actually achieve your goal. Now let’s take the final steps needed to automate your savings.
- Set up a separate savings account. Bonus points if your bank gives you the ability to add a name/label to the account, you can name it ‘Vacation Fund.’
- Set up an auto-transfer from your primary checking account (or wherever your paycheck is direct deposited to) to your new savings account to occur on the day your paycheck hits your account in the amount of $50.00 in our example vacation fund.
How To Save For Multiple Goals
You likely have multiple savings goals, in which case repeat the steps above for each savings goals. Some of the examples I gave can be combined into one account, such as an emergency fund to cover unexpected expenses like car repairs, home repairs, medical bills, etc.. But for others, I would encourage you to set up separate accounts as it will be easier to view your progress towards each goal.
Now when you want to take that vacation and live a rich life, you actually have the money in the bank to pay for it in cash. No worries about coming home from vacation to a nightmare credit card bill since you’ve saved to pay for the trip in cash. This means you can really enjoy the vacation knowing that you’ve worked hard and saved for it. Now that is living a rich life!