Saving is easier when you have a goal in mind. It keeps you motivated and helps you to stay on track. So what's your goal? To buy a property, car or boat? To build up a deposit to start a share investment portfolio? To save for an overseas holiday, a wedding or for your child's education? Or maybe you would just like to save up for a 'rainy day'.
Whatever your goal is, it's important to keep it firmly in your mind.
Did you know you can open a Savings Maximiser or Term Deposit for each of your savings goals (up to 9 separate accounts)? You can also nickname each account so you know what the money is being saved for. For example, if you are saving for a car and a holiday, you can open two Savings Maximiser accounts. Nickname one 'Dream Holiday' and the other 'My New Car' and start saving today!
Setting a timeframe
When do you want to achieve your goal? How long will it take to save enough?
Some goals will be time sensitive - e.g. if you have booked to go on a holiday in three month's time. Others will be a little more flexible such as buying a property (assuming you are still looking).
When setting a timeframe, you should make it:
You also need to look at the frequency of saving.
Are you able to put away money on a weekly, fortnightly or monthly basis (this is usually the frequency of how often you get paid)? Do you have some money already put aside that will contribute to your savings?
Once you've decided how often you can put money into your savings, you need to work out how much you can save.
How much to save
Once you know what you want to save for and how long you have to save, you'll need to determine how much to save.
There are two important things you need to consider. Firstly, how much you want to save and secondly, how much can you save in the timeframe you have chosen.
How much do you want to save?
If you are buying a property, how much do you need for a deposit and the purchase (refer to our mortgage hints and tips for full details about buying a home)? If it's a holiday you're looking to go on, how much will it cost for airfares, accommodation, transport and spending money?
Sometimes it is good to add another 5 or 10% to the amount you think you'll need, to cover additional unexpected costs.
How much can you save?
You then need to determine how much you can save. To do this you need to look at:
how much money you already have saved
how much you can save on a regular basis
the interest rate you can earn on your savings
how long you have to save
You can use our savings calculator to work out how much you can save in the time you have available.
Once you've looked at how much you can save, compare that to how much you want to save. Is it the same? Is there a difference?
If you need to save more, how can you do that?
Your next step is to look at your budget and do some planning. It's important to be realistic so that your savings plan is achievable.