Our experts answer readers’ questions about banking and write unbiased product reviews (here’s how we rate banking products). In some cases we receive a commission from our affiliates; however, our opinions are our own. Terms and conditions apply to offers listed on this page.
- A strong savings goal has a clear goal, dollar amount, and deadline.
- If you’re having trouble achieving a goal, break it down into smaller goals.
- High-yield savings accounts and CDs can be places to stash money to meet short-term savings goals.
Setting solid savings goals is a great way to save money. To achieve your goals, it’s important to know how to set a good savings goal and how to develop strategies to achieve it.
How to set a good savings goal
The key to setting a good savings goal is finding ways to make it measurable, time-bound and specific, says Christopher Stroup, CFP and financial advisor at Abacus Property Partners.
“A bad goal would be to say, ‘I want to save more.’ It’s opaque and you can’t anchor or track it yourself,” Stroup says. “A better goal would be more specific, like, ‘I want to save $3,000 in my emergency reserve over the next six months.’”
Here are three steps to creating strong savings goals.
Have a clear goal for saving money
Find out why you’re saving money. Is it a vacation, holiday savings or a down payment on a house?
Patrina Dixon, CFEI, RFC and Founder and CEO That’s $ My moneysays that setting a clear goal can help you become more aware of how discretionary spending affects your savings.
“If you know you’re saving to go on holiday, for example, imagine that. When you think about spending money, you might look at this photo and realize, “If I buy this item, it will take me longer to save up what I need for the holidays,” Dixon says.
Include a dollar amount in your goal
Calculate the total amount you will need to save to reach your goal.
For example, if it is a vacation, calculate travel expenses such as plane tickets, places to stay, activities and food.
If you’re building an emergency fund, financial experts typically recommend saving about three to six months of expenses.
“I think it’s important to understand what the absolute amount is that you need to save before you can build pieces with them. This helps consumers understand what goal size is appropriate for them to achieve,” explains Stroup.
Set a deadline for achieving your goal
Set a date when you want to achieve your goal. You can factor in your budget to determine how much you can budget for each week or month.
Once you’ve set your savings goal, consider the following tips for maintaining and achieving it.
How to maintain a good savings goal
Browse interest-bearing bank accounts
Finding the right place to save money can help you achieve your goals. Stroup says high-yield savings accounts, CDs and money market accounts can be a good option for short-term goals because they are safe and interest-earning bank accounts.
Your money is FDIC insured in your bank account. If a bank fails, these accounts will safe up to $250,000 per depositor, per ownership class. The best high-yield savings accounts, CDs, and money market accounts offer high rates with minimal fees.
Stroup says that if you have a longer time horizon to achieve your goal and you’re not afraid to take risks, you might consider investing your money instead of saving.
If you want to track your progress toward your account goal, Dixon suggests opening multiple savings accounts or a high-yield savings account with compounding. Using this strategy can be helpful if you want to separate money for your financial goal from the rest of your savings.
Prioritize your savings goal before you spend your money
Both Stroup and Dixon recommend setting up automatic transfers from your paycheck to your savings account. Implementing this strategy allows you to prioritize your savings goal over other expenses. It also ensures that you make regular contributions.
Track your progress and make changes if necessary
Check back regularly to see your savings progress.
Some savings accounts have linking features that allow you to create individual savings accounts and see your progress toward that specific goal.
If you keep all your savings in one account, you can also use one of the best budgeting apps to track your progress.
In some cases, you may not be able to save as much money as expected – and that’s okay. When this happens, review your expenses and readjust your budget. Try to set a spending limit in an area where you think you can cut back.
If you’re struggling, break your goal into smaller tasks
It’s easier to save for some goals than others. If you’re saving for a big expense or building an emergency fund, Stroup recommends breaking your goal down into smaller goals.
For example, let’s say you want to save a total of $20,000 in your emergency fund. You can divide your goal into stages. Start by trying to save $4,000 in a year. Once you have $4,000 saved, you can try to save a total of $8,000 the next year, and so on until you reach an emergency fund of $20,000.
In summary, having a clear reason for saving money and a plan to execute it can go a long way in helping you achieve your financial goals. If you’re having trouble reaching your savings goal, ask yourself if you can adjust your strategy to increase your chances of success.
Frequently asked questions about savings goals
A good savings goal must be precise, not vague. It also helps you establish an execution plan so that you can achieve your goal.
You can define a savings goal by setting a goal, including a dollar amount, and setting a date for when you want to achieve the goal. This framework helps make goals concrete and encourages implementation. If you’re saving for short-term goals, an FDIC-insured interest-bearing bank account may be a good place to keep your money.
The 30-30-30-10 rule is a budgeting strategy that divides your budget into 30% for housing, 30% for essential expenses, 30% for financial goals and 10% for non-essential expenses.
SoFi checking and saving
Earn a bonus of up to $250 with qualifying direct deposits for eligible customers through 12/31/2023. Earn up to 4.60% APY on savings balances (including Vaults) with direct deposit