Why Is It Important to Have Savings Goals

by Krantcents · 9 comments

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Savings is the key to success!  I am not just talking about saving for retirement either!  When I was much younger, I remember saving for the things I wanted because my parents gave me everything I needed.  Most kids save for their first car, college, first house, getting married, vacations, major purchases and retirement.  Everyone should have savings for emergencies and other unexpected expenses.  Do you have a savings target?

Why have a savings target?  You need a goal in order to reach or achieve the goal.  If you are going to buy a car, you need a target.  Saving for a down payment for a home means you need to know how much home you can afford.  A typical down payment is 20% of the purchase price.  Saving for a down payment takes time and effort.  You need to figure out  how much home you can afford years before you have the money saved for the down payment.  This is true of buying a car and other major purchases.  Saving for college or graduate school may take some years too.

If I wanted or needed $60,000 for a down payment, I would put together a plan of what I needed to deposit or invest monthly to achieve that goal.  This is true for retirement, college, buying a car or any other major purchase.  What do you do?  How can you reach your goal without a target?  Everyone should have a savings target!

Photo by:  Vectorportal

 

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{ 8 comments }

Lance @ Money Life and More September 15, 2012 at 6:35 am

The only savings target I have right now is helping my girlfriend pay her loans off when we get married. That is a pretty massive target though so it is all I need right now.

That said after that is done I imagine I’ll save up for my car replacement again (I’ll be using that money for her loans) and then for a kitchen remodel!

Krantcents September 15, 2012 at 6:52 am

Savings targets are important if you want to achieve the goal

Roshawn @ Watson Inc September 15, 2012 at 4:56 pm

I definitely have a lot of savings goals. They keep you focused and make sure that you prepare adequately. I will say having a savings contingency plan is good too.

Krantcents September 15, 2012 at 5:31 pm

I have a number of savings goals. It may be a specific item like a vacation or just for th esake of savings. Savings for me, means choices.

maria@moneyprinciple September 16, 2012 at 12:24 pm

You are right on target here – goals focus attention and we becom sensitised to opportunities we didn’t even know existed. We have savings targets – but savings should be interpreted very broadly as an amount of money that we get together and than use to do/buy/invest etc. At the same time, there are many areas where I don’t agree with goal setting – goal limit your perspective on things and lock you in existing trajectories.

Krantcents September 16, 2012 at 12:40 pm

Goals should not be set casually! Some thought should be given such as a plan to achieve the goal. Savings goals require the same kind of thought. It is not enough to set a goal of having $1 million when yu retire, if you do not have a plan to achieve it.

Jason Clayton | frugal habits September 17, 2012 at 5:46 am

I’ve always used “automatic” transfers with my bank to reach my savings goals. Essentially when I get paid, that same day the money transfers into my designated savings buckets. It works great, and adds up fast.

Krantcents September 17, 2012 at 7:49 am

I set up a payroll deduction 40+ years ago and set my saving on autopilot. It makes savings a priority and helps you reach your goals. It also gives you structure to live on less.

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