Some of you may look at the title of this article and ask the question, can I really save money in this day and age to achieve my goals?

Review your current situation

Firstly you may say that you can’t save because you’re not making enough money, but the amount you save has little to do with your income.  It has more to do with whether you really want to save and if you are willing to adjust your spending habits to boost your savings. When you talk to people about how they go about planning their financial future, most will say they respond to individual issues in much the same way as one might with an illness: deal with a specific problem and when it's sorted, that's generally the end of it. But while this approach is understandable, it does make sense to take a more holistic approach to your finances. This holistic approach is part of a much deeper process of financial planning. For example, there is little point in charging ahead with your financial goals before you've reviewed your current financial status. Here you need to be honest with yourself about where you are now – for instance, if you're in a lot of debt, a goal that involves spending a lot of money might be unrealistic. To find out where you stand financially, draw up a budget showing your income and outgoings.

Set up a budget planner

Cast a critical eye on the stuff you have in your closet, I mean way back in your closet to the things that you haven’t used in six months, chances are you can do without it, why not get the rid of them at a reasonable price?

What about having your own piggy bank?  All you have to do is take your pocket change at the end of the day and drop it into a jar.  If you can do that and put away at least $1 per day, that would be $7 per week and at the end of the month you’ll have about $30 and I know that your pocket change is more than $1.
Let’s look at food.  I don’t want anyone to think that I am hitting on the restaurants or pastry shops but how about bringing your lunch from home a couple of times, calculate how much you would be able to save.  Any time you cook, make twice as much as you’ll eat and store the leftovers in he freezer, by this you’ll save on cooking gas.

How about credit cards?  No offence to the Credit Card institutions.  But this one has lots of opportunities for reductions.  Pick up two months worth of credit card bills and add up the interest you paid.  If you pay your bill in full at the end of the month, see how much you could save every month.  Credit cards can be a cash-flow management tool, but paying only the minimum payment monthly will keep you in debt for years.  By simply waiting until you’ve saved enough money to make purchases you could eliminate those interest payments entirely.  If you’re thinking about getting a card for convenience, then a Debit card from National Bank would be the one to get.

Look at previous bank statements to see exactly what you spend your money on – this will highlight what's essential and what isn't. Essential outgoings include your mortgage payments or rent, household bills such as gas, electricity and water, and car and home insurance and payments. Once you know exactly what you spend each month, you can look at how to cut costs to create additional income. For example, could you cut down on your non-essential spending or when it comes to your essential spending is there a way you could shop around for a better deal? This will help you reach your financial goal even quicker.

Be clear about your goals

Once you know how much money you can afford to put aside each month towards your specific goal, you need to know exactly what you would like to achieve. You need to be very specific. Apart from anything else, working out your goals in detail is an important part of meeting them. The more definite you are, the better the potential to change. So how do you go about creating a financial goal? The first thing I'd do is drop the word 'financial'. Goal setting is about what people want out of life, or dealing with changes in their lives. If you really think about it, most issues that matter to people - like a career change, re-training, getting married or going to live on the other side of the world – are not financial goals as such, although they have financial implications. For example, people don't say: I want $450,000. They say: I want to be able to retire two years earlier. So don't start off by thinking in terms of dollars and cents. To assist in that process, you first need to ask yourself a series of questions that at first sight appear to have nothing to do with financial planning. They include identifying the names of the most important people in your life, if you spend enough time with them, if there is anything – like cooking, art or writing – that you've always wanted to do.

Setting your goals

After this, you need to set your goal out in writing. Most people find it helps to clarify whether they really want it. It is also part of the process involved in working out how to achieve it. Create a worksheet with column headings for short/medium and long-term goals, the cost of the goal, the target date and how much you need to put aside each month. This will not only clarify what you want the most, it also helps you to work out when you can realistically reach your goals. Short-term goals can be anything that is achievable within six months to two years, and could be paying for a holiday, replacing a faulty boiler or perhaps buying a new car.

This could also include reducing debt or building up a savings pot. Medium-term goals are the ones that require a slightly longer timeframe and could include paying of a larger loan or perhaps saving up for a house deposit. Finally, long-term goals are the ones that often take 10 years or longer to achieve. This could include everything from paying off a mortgage, saving for your children's future or saving towards your retirement. To stick to your plan, it could be good to set some milestones. 

These will help you to measure what you are doing as well as setting realistic targets so you don't feel overwhelmed by the scale of the task ahead. For example, if you're saving up for a $20,000 house deposit it might be worth dividing it into $5,000 milestones.

Learn to compromise and prioritise

Another key ingredient when working towards a goal is to learn how to compromise and prioritise. In the course of creating a set of goals, there will need to be lots of compromises between family members. The reality is that what matters to you may be far less important to your spouse and vice versa. You might like the idea of saving up to buy a motorcycle and go on a round-the-world trip, but your partner might prefer to buy a horse and ride that. Also, you may need to juggle between goals and the finite resources at your disposal. You might want to retire at 55 instead of 60 or 65, but you also have to pay for your daughter's wedding next year and replace your car in two years' time – and you've only got a few hundred a month to do it all with.

Trying to achieve impossible goals could be at the expense of others that matter more. For example, meeting an important long-term goal – being debt-free in 15 years – may mean downgrading a short-term goal, like going on a fortnight's holiday to the Bahamas next year. Understand exactly what is involved in the dual process: you are deciding both a final outcome and the journey involved in getting there. In other words, they determine how you will live your life today.

Remember your goals are not set in stone

You may also need to adjust a goal to reflect what is happening in the outside world, or alter what you are doing to ensure your goal is reached as originally planned. Because, the one thing you can guarantee is that when you set out to achieve a goal, for better or worse life will get in the way of meeting it. To combat this you need to regularly review your strategy and monitor where things are headed. Finally, you also need to set aside money for a rainy day in case something unexpected happens.

Also consider how you would cope financially should you lose your job or become ill or injured and unable to work. Lastly, if you're struggling with drawing up a realistic plan you can always seek professional advice. And finally, I have to reiterate that you must try and save at least 10% of your income. Educate yourself.  Sit down with your monthly bills and statements and figure out your income then decide if you like the picture you see.  If not, you’ll need to create a plan for changing that picture. Ask yourself, how do I want to live?  How do I want to use my money?  How can I make my money work for me? 

National Bank can help you hit your target and make your dreams your destiny. Come into any branch and ask about our Target Savings Account, your key to achieving your saving goals.