Most of us want to save money. Because that’s what you’re supposed to do, right? Save at least 20% of your income? However, many of us either aren’t saving or hate saving for one big reason -- we don’t know what we’re saving for.
There are a million reasons to save, but these reasons may differ wildly from one person to the next. For example, one couple may be diligently saving to buy a home, while their closest couple friends aren’t interested in owning real estate. So what is their motivation to save?
This answer will be different for absolutely everyone. While there are some savings goals everyone should have in mind -- like money for emergencies and for retirement -- everything else is up to you and your preferences. You may want to save up for a home, a car, a wedding, a family, long-term travel, artwork, college, fancy electronic equipment, or a lifetime supply of Skittles. Whatever it is, decide what your goal is before you start saving.
Very few people have the motivation to save without a specific goal in mind. At least for me, I’m way more likely to save when I know I’m saving for something, instead of just arbitrarily saving. Let’s set some goals!
Put It On Paper
Write down everything you want in life. A lot of this won’t be finance-based, but write it down anyways, this may help you prioritize later on. Don’t take more than ten minutes to do this -- if it doesn’t come to you in ten minutes, it’s likely not a priority.
Look for Patterns
If an outsider were to look at your list, what would they notice? Does it look like a travel bucket list? Your goal may be to save for long-term or frequent travel. Does it read like a brochure for the American dream? You may want to start saving for a house and kids. Maybe it involves a brand new career or entrepreneurship? It might be a good idea to save up so you’ll have a buffer if you need to go without an income for a while.
Determine What Your Goals Are & How Much They Will Cost
Once you spot the patterns, you should be able to determine what your goals truly are. Write these down, along with how much said goals will cost, and when you would like to accomplish them. Divide the amount of money you need by the amount of months you have until you would like to reach your goals, and you will have your monthly savings rate. Even better, you have a goal in mind and a reason to save, which will make paying yourself first so much easier. Then, all you have to do is...
Saving is important, but you’ll never do it without a clear goal in mind. Figure out what you want and determine how much you’ll need to save each month to reach your goals. And of course, don’t forget to also save for emergencies and retirement!