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How to Structure your Savings to Reach Your Goals

ArticleID 159  
Writer Isaac Thuku
Category Personal Article

Everyone talks of saving yet no one ever comes up with a solid structure to highlight what it is all about. We all would love to set aside some cash for a rainy day. Question is, which is the best route to take as you save so as to reach your goal? After all, one man's meat is another man's poison and you cannot decide to take a different route every time someone convinces you that the route they took worked for them. You will need to know:

• How much money you need to save.

• Where to put the money.

• How to make sure it stays there.


While many think that those who have a higher pay cheque should be in a position to save more, this theory is not entirely true. There are several other factors to put into consideration when you have the intention to save. There is the reason you are saving, your current responsibilities.


First and foremost, it is best that your goals are set right. Goals are set in reference to your income and the objective for saving. You need to have a driving force to keep saving. This driving force may include both short term (buy furniture) and long term (buying a house) goals. This acts as a constant reminder that you need to set aside that given percentage of your income. Your goals must be SMART. In this, they need to be realistic, measurable, attainable, realistic and time bound.


For example: You may decide you need a car since you work as a sales person which will make it easier to move your goods. Depending on your level of income, a SMART savings plan requires that you specify on the type of car that will meet your objective. In this, all luxury cars are out of this list. Once you determine which car, its price must be identified. With your income and the price of the car, the other factors fall into place. Your income will determine how long it will take to buy the item. You are time bound at this stage.


Another save point would be to minimize on your current costs. There are a few things you will sacrifice so as to save the amount you need. These items do not fall under the basic needs category. Reduce on gas expenses, use one car to work as you drop off the rest of the family members rather than every member leaving with their own cars, shop from discounted retail outlets etc. also, avoid using credit cards at all costs. You are increasing your debt which must be paid in the near future. This will help you channel more money into your savings project.


Do not save money in the same account as your income. Probability is that you will end up spending it. Open a different account for your savings project. It is advisable that you open a savings account. Savings accounts limit the number of times you can gain access to it. In addition, you get an interest rate. No matter how small, it goes into adding an extra amount into your original amount. This brings you closer to reaching your goals.


These provided guidelines bring you a step closer to not only saving but to attaining your set goals through this savings. Remember, you must be discipline to play by your rules too.


How to Structure your Savings to Reach Your Goals
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