It’s no secret that money can be a source of stress — particularly when income is low and monthly bills are, well, higher. But what if the idea of trying to save something…anything…for the future is also a line item on your list? It can be intimidating to save for all of life’s competing priorities.
The secret is that it’s really very formulaic. Saving for any goal = Time (in other words the amount of time you have to get there) x Money (or the sum that you’re able to sock away on a regular basis.
For the most part, our smaller financial goals, like taking a vacation, require less money saved, and we want to meet those goals quickly, usually by the end of the year. For a $2,000 (Savings) vacation in 10 months (Time) you need to save $200 a month or $50 a week (Money). Meanwhile, bigger goals, like saving for retirement or buying a home, will take many thousands of dollars, and require saving for many years. (The added benefit to having more time is that you can also invest the money allowing the miracle of compounding to work in your favor.)
Saving for small goals feels more flexible — and it is. With a few cutbacks here and there (more on that below!) you can watch your savings account grow quickly, and you can adjust exactly how much you save each month based on your other priorities. In contrast, saving for big goals like retirement requires more discipline, and consistent contributions to stay on track. Here’s how to go about both.
If you’re saving for something small, a couple of the best ways to make it happen include:
If you’re saving for something big, here’s how to make it happen:
Keep in mind that some savings strategies work well no matter what our goals are, including: