It feels good to have something to look forward to. Whether it’s a long-term goal like a car or house, or a short-term goal like a weekend getaway or gaming console, it’s important to have a savings plan. While these exciting savings goals can sometimes feel impossible, Swoosh has compiled some great tips to get you started. Get your confidence back with our six-step plan for saving and budget tips before you consider a payday loan.
Overview
Savings goals ideas
General financial habits
For some people, savings goals might not be for anything specific, but rather improving financial habits or being more intentional with spending.
Common savings goals include:
- Saving 10% of your income and increasing it if possible
- Making and keeping track of a monthly budget
- Reducing spending and cutting down on consumption
- Creating a Christmas, birthday, travel, or emergency fund
- Pre-saving for car insurance, servicing, and registration for the year
- Improving credit score
- Quitting a bad money habit like impulse shopping, sports betting, or constant takeout
- Saving money on power bills and water bills
No matter what, it’s always a good idea to have some money in your back pocket, because you never know what is coming. But if you need something to work towards, we’ve got some savings goal ideas for you, too!
Short-term savings goals
Short-term savings goals are usually achieved within a few months to around a year. They can be something as small as a collectible or fancy piece of clothing to a new household appliance. They can either be necessities or something you’ve had your eye on for a while.
Some examples include:
- Purchasing a big ticket item:
- Phone
- Laptop
- Gaming console
- Furniture
- Appliances
- Paying off a credit card
- Planning a short holiday
Medium-term savings goals
Medium or mid-term goals take 1 to 5 years to achieve. But note that these categories or time-frames are not a rule! For some people, common mid-term financial goals may be more long-term in nature, and vice versa. Different people have different expenses, family situations, and incomes, and some may be saving alone, with a partner, or with a group.
Some mid-term saving goals examples include:
- Home renovations
- Wedding and honeymoon
- Living expenses for studying on exchange
- Paying off HECS debt
Long-term savings goals
Long-term savings goals are the big, life-defining savings goals that take 5 or more years to complete. Some of these goals can take until your whole working life! Here are some examples:
- Trust fund for children/grandchildren
- Extended periods of travel
- Deposit for a house or mortgage
- New vehicle
- Retirement
- Major life changes like:
- Extended time off work
- Career change
6 Steps to savings goal success
1. Assess your current position
Start by writing down a full list of your income and expenses.
When we talk about income, these are expected sources of income. Don’t include things like lottery winnings or promised money from family — no matter how confident you are! Income can come from the following sources:
- wages
- dividends from interest
- royalties
- rental income
- earnings from a business
Expenses, of course, are things you regularly spend money on. They are mostly necessities, but there is the occasional luxury!
Weekly, fortnightly, or monthly expenses can include:
- Rent/Mortgage
- Groceries
- Petrol or public transport
- Loan repayments
- Subscriptions (Netflix, gym)
- Entertainment
- Phone plans
Annual or quarterly expenses can include:
- Utility bills
- Insurance
- Vehicle registration and maintenance
Breaking quarterly expenses into a weekly cost can help you put aside money to pay them when they are due.
2. Set your goals
Now that you know where you are financially, you can figure out where you want to go. Use our examples above to figure out your short-term and long-term goals, the time frame, and how much you want to save.
Once you set your goals, you can create a budget that will help you systematically work towards them. A good tip for budgeting is to prioritise your expenses. Fixed expenses such as rent and food come first, then savings/debt repayments, then variable expenses such as entertainment.
3. Pay off debt as soon as possible
One way to make saving easier is to pay down your debt as quickly as you can. Many people choose to focus first on high-interest debt, such as credit cards and personal loans.
While it can be tempting to save and repay debt at the same time, putting more money towards high-interest debt early on may help reduce the amount of interest you pay over time.
Money owed on high-interest products, like credit cards, can build up quickly. Over time, this can reduce your ability to save or make it harder to get ahead financially.
To illustrate this, let’s look at a simple scenario. Two people are each repaying a $5,000 debt at 12% p.a. They have the same income and expenses:
- Person A pays $400 per month towards the debt and saves $400 per month
- Person B pays $800 per month towards the debt, then starts saving once it is repaid
In this example, Person B pays less interest overall and ends up ahead by around $400–$500 by the time Person A finishes repaying their debt.
Of course, everyone’s situation is different. For some people, building a small emergency fund while paying down debt can also be helpful. It may be worth considering putting a larger portion of your available money towards high-interest debt while continuing to save what you can.
If you’re struggling with debt and aren’t sure how to move forward, MoneyTalks NZ is a free, confidential helpline that offers guidance from trained financial mentors. This service helps people in New Zealand manage their finances, deal with debt, and navigate financial challenges.
4. Split your savings
Now that you have set your goals, paid off your debt, and are saving money, you are ready for the next step!
It can be a good idea to have two or more separate accounts for savings. One for short-term goals, like a holiday or luxury items, and another for long-term savings.
Here are recommended separate bank accounts to have:
- Long-term savings: house, retirement fund, investment (not touched until completed)
- Short-term savings: holiday, entertainment item, luxury item (wants, not needs)
- Irregular bills and necessities: utility bills, car registration, car service
- Emergency fund
By structuring your savings this way, you fulfil three basic financial needs – security for the future, having money for bills when you need it, and being able to treat yourself.
5. Automate your savings
This one is simple. By prioritising your savings with automatic withdrawals, you can change your habits and foster a savings mentality.
It’s effective because money is taken out of your account and placed into a high-interest savings account to accrue interest. More money in these types of accounts means more interest, which also means getting closer to your savings goal.
Doing this can also facilitate a lifestyle change, which could have the power to transform temporary habits into long-term behaviour. Regularly transferring more from your spending to a savings account means that you have less from your paycheck to work with, which means you need to be a lot more careful with your spending. You might decide to stop buying daily coffees or bottles of water, or reduce getting fast food and takeaway. Being more intentional with spending will ultimately cause you to build new habits and save even more long-term.
6. Stick to the plan
This is the hardest and most important part! The key to success is to leave some wiggle room in your budget each week. After all, life is for living, so make sure you allocate a little bit of money each week to treat yourself. Being overly strict with yourself won’t last.
Bonus tips to help achieve your savings goals
Get a piggy bank for loose change
Sometimes the old ways of doing things can be super effective. We barely notice loose change, and we don’t like carrying it around, so chuck it into a piggy bank, moneybox, or jar. Just $2 a day is over $700 in a year! We know that most people don’t use cash anymore, but a good savings goal tip is to withdraw cash regularly. You get a visual of how much you are spending and put away any loose change. Make it part of your monthly routine to deposit your piggy bank into your savings, then take out some fresh, larger banknotes!
Download apps to help save money
Unfortunately, a lot of decent money-saving apps are not free. If you’re trying to save money, the last thing you should do is pay for another subscription, as good as some of these apps sound. So, here are some free apps or apps with free tiers to check out:
- Bank apps: most major banks have an in-built spend tracking in their mobile apps, with some also including savings goal setting
- WeMoney: links all accounts in one place (banking, loans, credit cards, super, bills), set budget and categories, calendar for expenses, and more
- Frollo: syncs financial accounts and centralises them, tracks spending and regular payments, bill notifications, and goal setting
- Goodbudget: manually import and categorise transactions, plan and save using the envelope method
- Pocketsmith: manual visual budgeting and tracking with dashboards, forecast bank balances, and calendars
Use a savings goal calculator
If you can’t be bothered with downloading another app on your phone, you can always do it the classic way with a pen and paper or an online savings goal calculator. You don’t need fancy widgets to make a budget!
Start with how much you want to save and your time frame. Calculate how many weeks are in your timeframe, and divide your savings goal by the number of weeks. That number should be how much you put away each week.
Ask yourself if it’s achievable and whether you need to increase your timeframe or find ways to generate more income.
Need a little extra support?
If you need access to additional funds while working towards your savings goals, a Swoosh payday loan could help. With fixed-term loans, you’ll get a clear repayment schedule and a quick, simple online application process.
Apply online today and get started in minutes!