A Step-By-Step Guide To Saving for Short-Term Goals
By Literally Broke
Photo by pawel szvmanski on Unsplash
Watching my savings grow is one of my favorite pastimes in the entire world. It's so fulfilling to set aside money for the things you actually want.
As a reformed impulse shopper, I know how hard it can be to change your money habits. The secret is to break down your saving goals into small milestones.
Here’s the tried and true method I use to save for all my short-term goals.
I Align my Savings Goals with my Values
TBH there 1,000 things I’d love to spend all my money on. But the reality is, that this isn’t possible (yet).
Whenever I’m debating if something is worth saving for, I evaluate how it aligns my values. It’s cheesy but it works!
I value experiences so I like to focus my savings goals on travel and upcoming events, like my friends’ weddings.
That doesn’t mean I don’t save for other necessities I need! One of my sinking funds (read: short-term savings) is exclusively for clothing.
I put $20 into my clothing fund every week. This means that I can save up for the clothing items I actually want instead of impulsively splurging on the latest Princess Polly drop.
Like restrictive eating, restrictive spending can lead to binging. Setting aside money on a consistent basis is the #1 way to create a budget that’s actually sustainable!
I Set Goals Using the SMART System
While I’m not a big fan of self-help methods that rely on acronyms, SMART goals work for a reason. SMART goal setting is a method that requires your goals to be specific, measurable, achievable, relevant, and time-based.
In college I always worked a summer job and saved 20% of my earnings. Did I know what I was saving for? Hell no.
So you can guess what happened three months later when I was back at school...I spent it.
Because my savings wasn’t aimed at a specific goal I was liable to cash it in on any whim (which at various times included combinations of alcohol and Urban Outfitters).
Don’t make the same mistakes 20-year-old Scarlett did! Instead:
Decide what you’re saving for
Pick the app or bank you’re using to save
Figure out the date you need this money by
Know why this item or experience is important to you
I Reverse Engineer my Money Goals
My #1 tip for setting savings goals is to reverse engineer them. For example, if you know you need $1,000 in one year for a Parisian getaway, divide $1,000 by 12.
You can reach your $1,000 savings goal by saving $83 a month. Depending on your financial situation this number may still seem high.
If that’s the case for you divide $1,000 by 52 (the number of weeks in a year). Using this calculation you need to save $20 a week. $20 a week is super realistic, especially when you consider all the random purchases you probably don’t need to make that add up to $20.
Break down your goals into weekly achievements. Once you do that they become realistic!
I Use Empower to Save Money
If you follow Literally Broke, you know I love the app Empower! Empower is a budgeting app that automates saving for you.
Empower makes saving money super simple and fun. If you’ve struggled with saving in the past I recommend trying it out!
Saving money is all about saying “no” to things you don’t want so that you can say “yes” to the things you do want. Embrace the JOMO and you’ll be a saving star in no time!
The secret to saving is to break down your saving goals into small milestones. Here’s the tried and true method I use to save for all my short-term goals.