How to Track and Achieve Your Savings Goals
The most popular financial New Year's resolution people make is to increase their savings.1 No matter how much you currently have or the size of your goals, creating a system for savings can inspire healthy money habits and help you measure your progress throughout the year.
Here's how to create a plan, start saving, and track your progress, and ultimately realize your financial dreams.
Set your goals
For the year ahead, now's the time to set your savings goals. Go ahead and think about what you want to save for and make your list.
After you've made your list of things you want to save for, assign a dollar value or dollar range for each goal. It's great if you know the exact cost for a goal, such as a down payment on a house or even a new laptop. If you don't have an exact figure, that's okay too. You can assign a range and use the midpoint as your goal. For example, if you're saving for a new TV and think it'll cost between $400 and $800, you can make your savings goal $600.
Once you assign a dollar value to each goal, arrange your list in order of priority so you can create a plan to reach each in order of importance.
Create a savings plan
Now that you have your list of goals, it's time to create a savings plan. The most important thing to remember is that there's no right or wrong way to save.
Review your budget and find out how much extra you have each month to put toward your goals. Whatever the amount, figure out how you'll split it up across all of your goals. If you want to reach all of your small goals first for a boost of motivation, consider putting most of your savings toward those small goals while chipping in a bit for your longer-term goals.
If you have major, long-term goals such as a wedding or house down payment, consider setting up separate savings accounts for each goal. If you have several smaller savings goals on your list, you might find it easier to keep your savings in a single savings account.
Your plan should help you understand how much you have left in your budget each month to put toward savings and how you'll divvy-up your savings across all your goals.
Milestones will help you assess your savings progress and stay motivated throughout the year.
Set some milestones
Now that you have your savings goals established and a plan to reach them, take a moment to create some savings milestones. Milestones will help you assess your savings progress and stay motivated throughout the year.
If you like seeing every little bit of progress, a monthly check-in could be the motivation you need to stay on track. If you're someone who needs to see more significant changes in your savings balances as inspiration, consider setting a milestone to review your progress every three months.
Another way milestones can help your savings goals stay on track is to set deadlines for your goals. If you're saving to update your bathroom (new vanity, mirror, toilet and some fresh linens) and need $1,000 for that goal, you might want to hit that goal in five months. You can set a milestone for five months and then celebrate hitting your savings goal with a trip to the home improvement superstore.
Milestones can also help you make adjustments to your savings goals. Suppose you've fallen a bit behind on your goals. In that case, you can use your scheduled check-ins to make a one-time catch-up deposit, adjust any automatic deposits you have set-up, or even reallocate your savings from one goal to another as you work your way through your list.
However you choose to use milestones, they're all about keeping you motivated and celebrating your progress throughout the year.
Make it automatic
A big way to keep your savings goals on track is to put them on autopilot with automatic deposits to your savings account. A "set it and forget it" approach can help you worry less and save more.
You can set up scheduled transfers from checking to savings the day after each payday. If you have multiple savings accounts, you can set up automated transfers to each account so that all of your goals stay on track.
Automated transfers mean you'll never forget to make your monthly savings contribution. They'll also help give you a jolt of motivation by making savings feel effortless. As your savings balances increase, so will your confidence that your goals -- no matter the size -- are always within reach.
You now have a four-step process to create a savings plan and keep your savings on target throughout the year. The only question that remains is which goals will top your savings list for the year ahead and how you'll celebrate as each one becomes a reality.
Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
- Alexandria White, "10 financial New Year's resolutions to set now and achieve in 2020 ," CNBC, published August 27, 2020, accessed November 10, 2020. Back
Do you have questions or ideas?
Share your thoughts about this article or suggest a topic for a new one