6 Key Steps to Achieving Your Money Goals
Money. It makes the world go round. And it can make the world come to a crunching halt. On a personal level, or an international one. We have all seen, in the last decade, the results of financial disaster on a large scale. But its something we aren’t taught about. Unless you are lucky enough to have parents who are fiscally aware, you are unlikely to be taught how to properly manage money. Because it needs managing.
Money is not the be all and end all of life – but it is a crucial tool. It should be working for you in your every day life. And for that to happen you have to take control. It is something to be planned, managed, and tracked so that you are the one in the driving seat. I am someone who used to just spend, spend, spend on nonsense and then wonder at the end of the month why I was so broke and didn’t have any savings!
October 2015 was the first time I set myself a big savings goal. I had just taken a secondment in a more senior position at work. For a year I was going to be earning almost double what I was used to. I was scared, anxious, and stressed about the pressures of this new role but I thought to myself – October to October. I can do this.
One year of hard work. But how was I going to make this worth it to myself? I decided to save that whole extra amount of money I was earning each month. I had done without it before so it wasn’t necessary for my normal spending habits. Rather than just increasing my spending to match my new income, I culled it out of my current account every month as soon as it hit my bank account. I worked out that if I did this every month I would save approximately £10,000 in 12 months. This was a crazy amount of money to me. I was used to having a maximum of maybe one month’s wages in my savings account!
This project actually worked! I know, I was stunned too. By ensuring that I saved before I spent, I never felt the ‘loss’ of the money I saved. I maintained my budget based on my old salary, which had been enough for my needs. And it has changed my whole attitude towards money.
I now think about how I can live well on a budget, without feeling hard done by. And the benefit of making big saving goals is it gives me a sense of financial freedom. Because that is what money really buys. It is a tool which allows you to purchase freedom. You can pay off your debts, and lose that stress. You can pay off a mortgage, and allow yourself to focus on living more fully without that 25 years of repayments hanging over your head.
But please don’t think this only works on the large scale. If you are on a tight budget you can do this too. Whether you are a teenager doing a daily paper round and making savings, or you need almost every penny to pay the rent and buy your food. There is room for some savings at any stage – even if it’s £5. It will add up. And you will begin to love that feeling of being in control, of managing your money rather than the other way round.
Here are my 6 steps to achieving your money goals:
1. Develop clear goals.
“I want to save more” is just not good enough. My advice is to sit and think about your current financial situation. Take into consideration your 100% necessary spending, your discretional spending, and your crazy person spending too. Look at your current savings. One thing I struggled with was a lack of vision with my savings – with no why I struggled to find the motivation to avoid instant gratification. Usually in the form of another pair of shoes!
First find your why – maybe you want to save for a deposit, a rainy day fund ‘just in case’, to pay off debt or a mortgage, go on holiday, or that pair of Louboutins. There’s no judgement here.
Now you’re ready to set some goals!
- First, you need to work out the sum of money you want to save.
- Now you can work out what you need to save per month, fortnight or week – depending on how often you are paid.
- Ta-dah! You have yourself a financial goal.
2. Create a spending log.
How you go about this is entirely up to you. Maybe you’re a bullet journal junkie, or use your Filofax inserts. Perhaps an excel worksheet is more your style, or you can find some amazing templates online. Pinterest is where I find all the best things, check out my Resources board if you want some inspiration!
I have a combination of trackers. One I use to track monthly bills. Direct debits, standing orders and subscriptions are all recorded here. Just making this log highlighted to me 2 subscriptions costing me £62.99 per month that I could easily cancel as I didn’t use them. £62.99 immediate saving per month!
I also have a log for all my other spending. Keeping a record of every time you spend money, down to the pennies, means you get to see your spending habits and patterns. Some of them really shock you with how little things add up. You might realise that your daily lunch purchase when you are at work (mine averaged £5-£7) really isn’t that essential at all. Making my lunch at home saves me a ton of money, and has the added benefit of being better for me. It also gives the glow of satisfaction of being a kitchen goddess who is self sustaining and financially kicking ass. Win-win, right?
Making a log of your spending, and committing to it for a month, will give you a real insight into where your money is actually going. That means you can analyse what you really want to spend your money on, and make the necessary adjustments.
3. Save first, then spend.
Once you have a clear view of what is essential spending – your rent or mortgage, your bills and food shopping – you can see what you have left over. Now this is the key step: put your savings away as soon as you get paid. Save first, then spend.
What you will end up with is a three step process. First you will save, then you will pay your essentials, then you can use the rest for discretionary spending. Keeping things in this order mean you are prioritising your savings, and you won’t be tempted to spend all of your wages and then wonder why you only have a few pounds left at the end of the month to save!
4. Check in regularly.
Just like any other goal, make a date with yourself to check on your finances weekly. This way you can keep an eye on things – if you have unexpected essential spending then you can move your money around. A boiler breaking may put a slight pause in your spending, but life happens and you have to roll with it.
I love mobile banking for this – in a quick 5 minutes you can check on all of your accounts and move money around instantly. I would definitely advise checking out mobile or internet banking – its a fantastic way to stay in control of your finances on the regular. You don’t have to wait for the bank to send you a statement to find out what your money is doing!
5. Investigate different strategies.
There is an absolute ton of information on the internet about the best ways to manage your money. Get out there and have a look. You might find that different strategies suit you better than others. The only way is to try them.
Some break everything down into percentages. 50% of your income on necessities, 20% into long term saving, 30% for fun. Others even offer different plans for different ages, with goals that you should be aiming for in your 20s, 30s, 40s and beyond.
I’m not a huge fan of most of these plans. Mostly because they rely upon the generalised ‘should do’s’ that don’t actually always apply to us all! My own method of selecting an amount I want to save, and then pursuing that over a year, works well for me. My plan is a year long, I can maintain my motivation and my management of my money, and I can start fresh the following year! It’s also totally personal, you can adjust it to any income, to any goal.
6. Stay inspired.
This is a tough one. Saving money is an exercise in delayed gratification. But there are ways of staying inspired. I like to keep a log in my bullet journal of my savings, and I colour in my progress. It’s super satisfying! Getting to check on my accounts weekly and seeing my savings stacking up is also a moment that puts a smile on my face.
Maybe you want to make a vision board, or collect quotes that inspire you. Try out different things to see what works best for you – we’re all different!
Final thoughts:
Money is something that is a sensitive topic. Sometimes we don’t even want to think about it because it seems complicated, it seems unreachable, it seems like something only ‘rich people’ do. But whatever your income, you have the power to take control and set your own goals. Treat your money like a tool rather than some magical resource that is only understood by those of us with accounting degrees.
I’d love to hear how you all set savings goals, and if you use my 6 step plan for achieving them please do let me know how you get on!
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Photo by Fabian Blank on Unsplash
