There is no denying that having clear goals in life is important. One such goal could be financial – whether it’s saving up money to buy a house or to retire comfortably, we all need money and we know beforehand the lifestyle we want to live once we have achieved our goals. However, sometimes it can seem difficult to save enough money to reach our personal financial goals, but there are practical steps we can take in order to ensure that we succeed.
1. Fixed Milestones
Having a clear end-game is always good. That said, if it’s something too far off it can be hard to stick to a budget you set out. That’s why it’s important to create fixed milestones to keep you on your track. One way to go about it is an endowment plan Singapore -based people seem to prefer. It’s a sort of a mix between a savings and an insurance plan. However, you can typically withdraw from your savings account at any given time. With an endowment plan, you can only take out money once the milestone is reached. It could be something concrete like going to college, or it could be a previously specified amount of time that needs to pass before you can access your money. Of course, there are different kinds of endowment plans available, and they differ based on liquidity, protection coverage, return rates, and many other factors. Another option would be to simply open a savings account and go from there. In that case, however, it’s important that you exercise discipline and don’t withdraw your funds for things other than what you’re saving for.
2. Monthly Budget
Taking a good look at your spending habits is always a good step when trying to save money. When managing your personal finances, it’s important to consider how much you earn each month, and the ways you spend money as well. Differentiating between needs and wants is important here. For example, groceries, rent, bills, as well as gas for your car are all things that can be defined as needs. You have to pay those no matter what, and if some months are more expensive than usual – for example, if you get a higher electricity bill during the winter months, it doesn’t really change the fact that you still need to pay for all of these things. In contrast, eating out, buying clothes, or going out to the cinema are all things that can be considered as wants. You don’t really need them and they’re just passing fancies in the grander scheme of things. It’s important to contrast the two when creating a monthly budget for yourself and then see where you can cut costs so that you can put more money towards your goals.
3. Yearly Budget
It’s also a good idea to look at your finances in long term. Of course, you can’t see into the future but there are some unexpected expenses you can plan for that are likely to happen within a year. Your car breaking down, having to go to the doctor’s, or buying a new computer are all things that you can plan for when drawing up your yearly budget. It’s also important to set aside some money for these kinds of costs, so break it down into monthly chunks and make sure that there is enough saved up by the end of the year in order to pay for these expenses. On the other hand, there are also things that happen yearly you need to plan for. Birthdays of friends and family members, major holidays, and other instances where you’re likely to spend on gifts, food, or entertainment are things that you can plan for during your yearly budget. Setting aside money each month will ensure you have enough by the time these events roll around.
4. Be Realistic
It’s important to be realistic when saving up money to reach any goals you might have. For example, if you want to buy yourself a boat but you live in a studio apartment, it might be hard for you to justify saving up that kind of money if your monthly expenses are high as well. In this case, it’s important to try and find a goal you’re comfortable with as far as the amount of money is concerned. It might make sense to set aside enough for renting another apartment that’s more comfortable, but once you achieve that, you can focus on even bigger things. Besides that, it’s important to not force yourself into an unsustainable lifestyle. While yes, you should always prioritize your needs over your wants, that doesn’t mean you should live like a monk either. Choosing certain luxuries you can enjoy on a regular or at least semi-regular basis is a good way to keep yourself motivated and focused on your goals in the long run.
In conclusion, it’s important that you set clear goals for yourself and constantly assess your finances to make sure you’re on the right track. While saving up money can be a daunting task sometimes, focusing on your needs as opposed to your wants is always a good start. It might also help to plan out yearly and monthly budgets so that you know exactly what you need to save up for. You can start small and work your way up until you achieve everything you wanted!