Savings Goals: Easy Tips To Set, Calculate and Reach Your Financial Milestones
Savings keep your financial future looking bright. It could be a safety net to fall back on in emergencies, or an account with funds to fuel dreams like going to school, starting a business or retiring.
For many people, saving can feel like an uphill battle — especially when you feel like you don’t have any extra money to put aside. Here are some easy saving tips to help you reach your financial goals — whatever they may be.
What is a savings goal?
A savings goal is a target you set for how much money you want to put aside for future use. It’s about more than just adding zeros to your bank account. Without setting a goal, it can be hard to measure your progress and stay on track. A goal gives you a target to reach. This could be building an emergency fund, saving to buy a car, putting a down payment on a house, or reaching your retirement savings goals.
Having a goal helps you, because different goals may need different savings plans. It can also motivate you to stay on track. When you know what you’re working toward, you have a clear picture of how your hard work will pay off.
How to set savings goals.
To set a savings goal, first decide what you want to work toward. Do you want emergency savings to tap for unexpected bills? Do you want to buy a new car or plan a family vacation? Do you want college savings for your kids? Whatever it is, you can now start creating your goal around it.
Your goals should be SMART.
Specific.A specific savings goal is more than just saying “I want to save more.” A more specific goal would be, “I want to save $500 for emergencies” or “I want to save $500 by the end of the year.”
Measurable. Make sure you’re able to tell when you’ve achieved your goal. You should have a defined amount that you want to reach. Think: “I want to put $500 into an emergency fund” or “I want to save $100 a month.”
Achievable. You should also make sure your goal is achievable. You need to be able to realistically reach your goal.
Relevant. Does your goal fit in with your life and your values?
Time-bound. Be sure to set a time frame around your goal, or you won’t be motivated to reach it. Your final goal should sound something like: “I want to save $100 by the end of each month.” It may even be a good idea to break that number down into a smaller goal, such as “I want to save $25 by the end of each week.”
Examples: Short-term savings goals
Short-term financial goals are typically goals that you can accomplish in less than five years. Some examples of short-term goals include:
- Building an emergency fund.
- Saving up to buy a car.
- Saving for a vacation.
- Saving to get a new phone, video game console, laptop or another piece of tech.
- Saving for holiday or birthday gifts.
Examples: Long-term savings goals
Long-term goals are goals that will take longer than five years to accomplish. This is because they typically require you to save a lot more. The sooner you get started, the better off you’ll be. Some examples of long-term savings goals include:
- Saving for retirement.
- Saving for college.
- Saving to put a down payment on a house.
- Saving to start a business.
- Building an investment portfolio.
How to calculate savings goals.
To calculate how much you should be saving in order to reach your goals, divide the total amount you want to save by the number of months left before your deadline. Here’s the formula:
Goal Amount/Time
For example, if you want to save $1,000 in six months, divide $1,000 by six. When you calculate this, you see that you’d need to save $166.66 per month, or $83.33 every two weeks.
If you have your money invested or it’s in a high-yield savings account, you need to do a little more math. Luckily, there are online savings goal calculators that allow you to simply input your goal, how much you’re starting with, your timeline, and the percentage your savings or investment accounts are expected to make. The calculator will do all the math and show you how much you need to be saving.
How to prioritize savings goals.
You probably have a few different savings goals, which can make it hard to know which one to start with. Generally, it’s best to start with an emergency fund and plan for your long-term goals. But depending on your situation, prioritizing other goals first may make more sense. So when planning, also take into account what works for you.
Emergency savings. Building an emergency savings account should be your first priority. Having money in the bank that you can access when you need cash fast helps keep all of your other goals on track. If you have an emergency fund, you don’t need to throw off your monthly budget to cover unexpected expenses.
Retirement planning and long-term goals. As the name suggests, these goals are going to take a while to reach. The earlier you start, the easier it is. You can work on these at the same time as your other goals, but these should be a priority. Also, with an individual retirement account (IRA), you have the ability to potentially grow your savings through investments. Starting early gives your money more time to work for you and earn you more.
Buying a car or house. If you have an emergency account and you’re happy with your savings plan for your long-term goals, you can start working toward lifestyle goals. This could be a new car or buying a home. These types of goals may depend on your specific needs. For instance, buying a car may be more important if you don’t have reliable public transportation available. With both cars and houses, the more money you can put down upfront means the cheaper your monthly payments will be. Having reliable transportation and a safe place to call home is important, and a house can be a great investment.
Fun stuff. Things like saving for a vacation, technology or other stuff that you want but don’t necessarily need should be your lowest savings priority. When you start saving for these kinds of things first, you may find it hard to reach your goal. This is because any time there’s an emergency, you’re most likely going to find yourself dipping into this account. While it’s okay to treat yourself every now and then, you should focus on the things that are going to set you up for a bright financial future first.
Ways to save money.
Finding the right savings strategy depends on your income and financial goals. Here are four popular methods to help you establish consistent savings habits:
The 50/30/20 Rule
This classic budgeting guideline, known as the 50/30/20 rule, puts 50% of your income toward needs (like housing and groceries), 30% toward wants (like dining out or entertainment), and 20% toward savings or debt repayment. So, following this rule:
- 50% of your income goes to essentials like rent and groceries
- 30% is set aside for non-essentials like entertainment
- 20% should go toward savings or debt repayment
This is a well-rounded method for those looking to balance living expenses and financial security.
The 40/40/20 Rule
This is an approach that focuses on finding more areas where spending can be reduced. By consistently trimming unnecessary costs, you can maximize savings over time and put more resources toward your financial goals. Using this savings approach:
- 40% of your income goes to your needs
- 40% or less would be used for your wants
- 20% would be set aside as savings for the future
This plan offers some flexibility, while also leaving room for savings and self-enjoyment.
The 75/15/10 Rule
If you’re focused on navigating a period of financial strain, the 75/15/10 rule is another saving strategy to consider. This strategy, when there is less room in your budget, suggests:
- 75% of your income goes toward essentials
- 15% to cover your wants
- 10% needs to be directly deposited into savings
While challenging, this method may work for people with a tight budget, but need to save.
Pay Yourself First
As most financial advisors will tell you, this is the most important rule in personal finance. Whenever you get paid, you should take a portion of your income and put it into a savings account. If you get paid through direct deposit, you may be able to have some of the money go directly toward your savings, so you won’t even see the money in your checking account.
Experiment with these methods to see which aligns with your budget and lifestyle. Consistency is key!
Options for Quick Cash When Savings Are Low
Even the best savers run into emergencies. If your savings are low and you need money now, consider these options to source cash responsibly:
Make Money Fast
Leverage opportunities like selling unused items, offering gig work (ridesharing, delivery services), or freelancing online to generate quick income. It might not solve long-term issues, but when you need money fast, it could help with pressing expenses. Be sure to take precautions against online scams and potentially dangerous situations when looking for a side gig.
Borrow from Friends or Family
Although delicate, borrowing from someone you trust can be a flexible, interest-free solution. Open communication and clear repayment terms are essential to maintaining relationships.
Payday Loan Alternatives
Short on funds? You can avoid payday loans and cash advances by exploring alternatives for quick loans that may offer more flexible repayment terms and lower costs.
Installment Loans
For larger, one-time expenses, installment loans provide a lump sum, which can then be repaid in smaller, manageable amounts over time.
Lines of Credit
A line of credit offers access to funds as you need them, up to a set limit. Once you repay what you borrow, those funds become available again to withdraw as needed.
Emergencies happen, and having a backup plan helps reduce stress during these times. If you’re considering borrowing options, always plan repayment to avoid further challenges.
By combining smart saving habits with sound financial tools, you can protect yourself from unexpected expenses and build financial resilience.
Expert tips to reach savings goals.
- Set it and forget it. When doing your financial planning, you should make it as easy as possible for yourself to save. You can automate your savings to make it simple. Just set up automatic transfers on a schedule that works for you.
- Hide your account. Sometimes it’s tempting to dip into our savings when we don’t need to. Having your account out of sight removes some of this temptation. You can open a separate account at another bank, or use an online banking platform that gives you the option to hide an account.
- Choose your savings account wisely. Some savings accounts offer higher interest rates than others. Your basic savings account should ideally be a high-yield savings account. A high yield means the bank pays you a high interest rate for saving with them. Your bank should also describe themselves as “member FDIC.” This means the bank is FDIC insured and offers advisory services and different savings vehicles, like certificates of deposit or brokerage accounts.
- Pay off debt. Debt can be a big drain on your monthly income. If you have credit card debt, student loans or a car loan, paying off debt can free up more cash for you to stash away.
- Get a side hustle. If you feel like you’re just covering your basic living expenses and don’t have extra income to pay off debt or save, you can either negotiate a pay raise, look for a new job or start a side hustle. You can find a lot of advice and opportunities online and in your local community.
DISCLAIMER: This content is for informational purposes only and should not be considered financial, investment, tax or legal advice.
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