by Emily Hechler 
Do you have a large expense to pay for in the near future? Do you need a reason to spend less money? Why not spend some extra money since you have it? You might hear people talk about a large purchase they recently made and wonder how they could afford the expense. You can find yourself in the same situation by saving toward a goal.
Step 1. Determine your goal. Saving toward a goal helps motivate you to keep saving your money. Saving for intangible concepts can be difficult to execute, since you’re saving money for the sake of spending money. If you want to start saving but need some inspiration, here are some goals to save toward.
- Down payment for a car – Some people replace their cars every couple of years. Some keep theirs running for as long as possible until it’s just too expensive to repair. Whatever method you use, cars are expensive. Saving for the down payment of a car is a tangible financial goal. Pick out roughly which car you plan to purchase next, so you have an idea of how much you need to save.
- Emergency fund – An emergency fund is a stash of money that you should only use in emergency situations. This can include unexpected medical bills, funeral expenses, or sudden house repair needs among a variety of other things. By having an emergency fund, you can avoid financial strain when these situations arise.
- Education – Whether you plan to take professional development courses, enroll in college, or go to trade school, continued education is expensive. Plan to save a percentage of your tuition to help cover the cost. This can help you delay the need of student or personal loans by planning ahead.
- Vacation – Vacations are all fun and games until you realize how much money you spent and will continue to pay through your credit card bill. While planning every expense on a vacation is unrealistic and even boring, you can still save for these experiences. Create a vacation fund to help cover the cost. This will help you spend more time enjoying your trip instead of more money.
Step 2. Calculate how much you need to save. One of the hardest parts about saving toward a goal is determining how much money you need to save. If you’re saving for a large expense, calculate a percentage that you want to save. For example, save 20% of your next car’s sale price. For expenses like an emergency fund, education, or vacation, save a certain dollar amount. $1,000 in an emergency fund or vacation fund is a great starting point. You’ll likely need to save more for education costs.
Step 3. Determine your end date. Your end date is the date where you need to have your money in hand. Some goals come with firm dates, such as the first day of school or the day you go to the airport. For other goals, your date can be flexible. Still document your target date to make your goal achievable.
Step 4. Budget your savings. Now that you know how much money and when you need to save, you can start to budget. If you already follow a budget, you can add this as another item in your list of expenses. If you don’t follow a budget yet, check out this article on how to create a budget. To determine how much money you need to save each month, first subtract what you already have saved for this goal by the total you need to save. Next, divide the new number by how many months you have to save. This is how much you’ll need to save each month.
Step 5. Start! Now that the math is out of the way, you can start saving toward your goal. Consider opening a separate Savings account for this money so you don’t spend it on a different purchase. Using this money for a different purpose is discouraging and unmotivating. To make the process easier, use online and mobile banking to automate transferring money into this account regularly.
Now you have the steps you need to save toward a goal. When you are ready to open a separate account for your goal, visit Alltru. We can help you choose from a variety of saving products so you can get the most out of your experience. Good luck!
