Financial Planning

Strategies for financial milestones

Saving for significant life goals is about more than just setting aside money. It demands strategy, discipline, and sometimes a bit of creativity. Think of it as a marathon rather than a sprint: slow, steady and smart. Whether it’s the unpredictability of financial emergencies, the enormity of retirement planning, or the often-formidable cost of tertiary education, the journey may seem daunting. However, with strategic planning, you can find ways to make the process enjoyable and even empowering.

Discover practical tips to start and maintain your savings habits for significant life goals. From handling unexpected expenses to making daunting targets seem manageable, learn how to infuse a sense of accomplishment and even fun into your saving journey.

Practical tips to achieve your life goals

5 tips to start and maintain your savings habits

Tip #1. Why your emergency fund should come first
This is the sort of savings you would dip into when the going gets tough without compromising your other savings goals.

Allocate a portion of your income specifically for unforeseen expenses. This fund acts as a financial safety net, preventing you from impacting on other savings when those unexpected (and inevitable) bills arise.

When it comes to how much to save in your emergency fund, aim to accumulate three times your monthly expenses. This allows you the breathing room necessary for most eventualities and gives you another important tool for getting back on your feet after a setback: time.

Tip #2. Retirement savings
The key is to initiate your retirement savings early to leverage the power of compound interest. Consider increasing your contributions annually, especially when you get a boost in salary or income. The key is to start and remain consistent.

To get started, break down the vast target into manageable phases. Begin with short-term goals like saving a certain percentage of your monthly income. As your income grows, increase contributions accordingly. Automatic deductions from your salary or bank account simplify the process, making retirement savings a routine rather than a monumental task.

Although retirement may seem far off, envisioning your ideal retirement lifestyle can make saving more enjoyable. It’s never too early to create a vision board with images representing your retirement dreams. This will create a tangible reminder that helps transform saving from a distant necessity to a present investment in your future happiness.

Always be sure to consult with your Sanlam financial adviser to explore investment options aligned with your risk tolerance and financial objectives. If you provide your desired retirement age and the income you’d want to have, an advisor can calculate how much you should be investing into your retirement plan every month to make your desires possible.

Tip #3. Saving for Tertiary Education
To start off, open a dedicated savings account. Set clear goals for each academic year or semester, factoring in tuition, accommodation, and other costs. Regularly review and adjust your savings plan as educational expenses evolve using an education savings calculator.

Saving for education is a gradual process, so break down the total cost by each year of study. Focus on one academic year at a time to ensure your savings align with current costs. Knowing you’re meeting short-term goals makes the overarching objective more manageable.

Tip #4. Make it automated
Once you’ve done your budgeting and allocated the amounts to each savings goal, automate as much as possible. Automating your savings is an effective tactic to stay consistent. Set up automatic transfers to your savings account on payday, to ensure you have a consistent contribution without requiring conscious effort. It’s one less thing for you to remember.

Tip #5. Adding fun to financial goals
While saving for financial emergencies, retirement, or education might not sound exhilarating, injecting an element of fun can make the process more enjoyable. Get creative by setting up milestone rewards. When you achieve a savings target, treat yourself to a small luxury or experience. This creates a positive association with saving and encourages continued commitment.

Additionally, turn saving into a collaborative effort. Share your goals with friends or family members who have similar aspirations. Create friendly competitions or joint savings accounts. The shared experience not only provides emotional support but also fosters a sense of accountability.

This article was first published on Sanlam Reality.

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