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The Benefits of Saving with a Goal in Mind

In everything you do, establishing goals and milestones along the journey is a great way to motivate yourself to achieve what you’ve set out to do.

Isaiah Elysee
Isaiah Elysee

A shocking and unsettling discovery from Bankrate.com in 2021 showed that 61% of Americans would not be able to cover an unexpected $1,000 expense. Why is it that so many people within the country are finding it impossible to save their money and ensure financial security in times of trouble? How can you prevent this dilemma from happening in your household? Though there is no universal solution for the issue, having goal-oriented and timebound savings are certainly actions you should immediately take to drastically improve your financial safety.

Defining Your Strategies

Before diving into the benefits of these saving tactics, it’s important to properly analyze what they mean. Simply put, goal-oriented saving is when you are putting cash aside for a specific purpose. You have a set goal in mind, whether that’s collecting capital for a car or home down payment, college tuition, or more. Whatever the reason, you are not just saving money for no reason; there is a specific purpose for that cash and you know exactly how much you’d like to save up to reach the goal.

Timebound wealth management is also just as simple as it sounds. While saving your capital, there is a particular time frame in which you need to reach your goal. Whether you will need to save the amount in a month or a year, there is a set date for when you expect or need to have all the funds.

Both strategies will work wonders in your savings, as they are very impactful to your daily life and tasks.

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The Accompanying Benefits

Raising capital with  these methods is both easy and extremely beneficial for your financial health. Ultimately, they will help you achieve your goals in a reasonable time frame. Here are some ways that it can be productive and advantageous for you and your family:

1. Worry-free spending

While saving for a down payment on your home that you want to purchase in the upcoming months, you succumb to buying the most recent gaming console or phone that was just released. Though you are happy at the moment, you come to realize that you have just accidently dipped into the funds that were supposed to be used on your impending purchase. Due to carelessly buying your new gadget, you realize that you are no longer able to make the down payment on the home when you wanted to. This now has opened the door to other homebuyers in search, and now you are  worried that you may not be able to secure the house, allowing for other buyers to come in and potentially claim it as their own.

In situations like these, people typically feel guilty because they may not have realized that they would dip into the funds they were saving up for other purchases or they simply could not resist the temptation to buy the less prioritized item, demonstrating a lack of self-control. This is a great area where you will recognize the benefits of goal-oriented saving.

By setting aside funds for your specific project (i.e. the home) you would have already deposited a fixed percentage of your paycheck towards the down payment. This narrows  the gap between the money you want to spend and what you can afford to spend, a key element in your success. Hence, the only money you have left over to play with would have no strings attached. This allows you to enjoy the money in whatever way you want–whether that’s buying clothes, gadgets, or going to the movies–without the worry of whether it will harm whatever big purchase you are saving up for.

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2. Increases Success Rate

American author Anthony Jay Robbins, better known as Tony Robbins, once said: “Setting goals is the first step in turning the invisible into the visible.” This is another main advantage of having specific, predetermined goals for your savings. When you have an outcome set in stone, you are much more likely to work even harder towards achieving it at a quicker rate. Rather than blindly saving, you will raise money to successfully obtain your set goal. You would create a new savings fund specifically for one purpose and, based on priority, will make it one of your main focuses. This will encourage you to make sure your goal is met before moving on to other projects.

3. Planning Ahead

With these savings plans set in place, you will be able to get a good view of the future outlook. It will give you the foresight  to recognize any potential obstacles that may come up along the path. As a result, you will be able to plan accordingly to avoid or quickly overcome these problems so that your journey is not negatively impacted. Additionally, this strategy will encourage you to begin saving earlier and will give you a clear timeline as your timebound saving efforts will have a set date to end. The earlier you start saving, the more time you give the market to grow your savings for you.

Knowing that you need to make a large purchase or pay a bill on a certain date will encourage you to begin saving in advance. Prioritize accordingly and you will have a clear view of how much you need to save each month to achieve the goal in an effective time frame so that you are being efficient with your finances.

Of course, because we are all humans, we may sometimes make mistakes in our calculations. Due to this, we invite you to use the Tellus App, which gives you accurate financial projections and encourages daily compounding so that your savings grows every day. This leads us into another strong benefit for this method of saving.

Photo by Kelly Sikkema on Unsplash

4. Automated Planning

You are planning on saving up $9,000 to pay off some student loans in 12 months (1 year), which can sound quite daunting until you break things down. Because you have a goal set alongside a reasonable time period, we can create an automated plan where a set amount of money is automatically deposited to your savings without you having to do anything. Using these numbers, you’d need to save $750 per month. If you would like to contribute to your savings every week instead of on a monthly basis, divide the $9,000 goal by the 52 weeks in a year and you wind up with just under $175 per week. Now that you have figured out your ideal savings schedule, it’s time to automate.

Automating makes saving effortless, as the money is moved on a schedule without you needing to do anything except initially setting it up. This is very productive, as you can be extremely busy throughout the week, and can easily forget to move money around. Before you know it, you are two or three weeks behind and have completely forgotten about your goal. Hence, automating is a very effective tactic to utilize. It will prevent you from under-saving or underestimating how much money you’ll need at any point in the process. But it can only be incorporated after you have established your goals and time frames.

Venus Williams, a famous professional tennis player, once said, “I don't focus on what I'm up against. I focus on my goals, and I try to ignore the rest.” To be successful in life, goals must be set and worked towards to ensure structure and organization. The same applies to your savings and financial security. Monetary achievements are usually attained by discipline and maintaining habits that are hard to establish, which is why so few attain good financial health. Review the steps above and start setting your savings up appropriately and you’ll already be ahead of most people. We encourage you to be goal oriented and motivated by a clear vision, mission, or aspiration that you commit to achieving in an effective time frame.

Personal Finance