One in three kiwis admits to letting their money take care of itself and hasn’t planned ahead for their financial future, according to BNZ’s financial futures research undertaken during 2017. Are you one of those who may have lost sight of your long-term goals, simply living life for today? Here are some steps you can take to increase your savings and build a solid foundation for future financial success.
Know what you’re saving for
As author of “The 7 Habits of Highly Effective People”, Stephen Covey puts it: “begin with the end in mind”; what are you saving for? For most people the goal of saving is to eventually reach financial independence – a future in which you no longer need to work in order to live comfortably and can instead spend your time doing the things you really want to do. Identify what it is that drives you to save.
Ensure your saving goals are SMART
SMART saving goals conform to the following criteria: Specific, Measurable, Attainable, Relevant and Timely. For each financial goal you set, decide how much you’ll need to save in order to get there. Write down how you’ll measure your progress and how you’ll know when you’ve reached your goal. Be realistic in your approach and review your goals regularly to ensure they remain relevant. Finally, set a timeline in place and decide on a future date by when you need to reach your goal.
Cut down on your costs
Unless you have some way of increasing your earning potential, you’ll need to cut back on expenses in order to set aside money as savings. Take a look at your credit card and bank statements to see exactly where your money is going. Then cut out anything unnecessary – like the gym membership you never use, or a subscription to a magazine you could read online instead.
Write a budget
Take control of your money by creating a budget that reflects your priorities. As well as forcing you to take a clear look at where your money is going – and often requiring you to weigh up your expenses and decide which take priority – a budget also helps you plan ahead for those often-unexpected expenses by ensuring you have money set aside in times when you need it. Use an online budgeting tool like this one from sorted.co.nz to simplify the process.
Pay your savings first
The best way to make sure you actually save each month is to put aside your savings as soon as you get paid. You could set up an automatic payment into a separate savings or investment account or talk to your employer about deducting a fixed amount from your salary each month to pay directly into a separate savings account. That way your savings are set aside before you have time to spend them.
Don’t get side-tracked
Now that you have a goal in mind and a plan of how to get there, it’s important you stick to it in order to reach your target. Make saving a good habit and ensure you have a solid plan in place for your financial future.
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