Rarely in life do we have just one thing to save up for at once. For instance, I’m currently saving for a trip to New Orleans, a new pair of sneakers and retirement, all of which are important but very different financial goals.
Saving for several objectives at once is all about getting organized and setting priorities– after that, the rest is as simple as sticking to your plan. Here are some tips on saving money for multiple things at one time:
Make a List
The first step is asking yourself this question: What are all of the things I need? Brainstorm anything and everything you’d like to start saving up for, no matter how important it is.
This is not the time to differentiate between needs and wants– that comes later. For now, just get everything on paper.
Set Goals
Take a look at your list and start organizing the items by deadline. Which goals do you need to save for first? Then, jot down exactly how much money you need to save for each item.
After your list is organized by deadline, it’s time to start prioritizing. Be practical about how much money you can realistically save while still paying rent, bills, buying groceries and going out every so often. If necessary, transfer some items onto a wish list.
Do Some Calculations
Start calculating how much money you’ll need to save each month (or each paycheck, if that’s easier) for each separate item by dividing the total amount you’ll need to save by the number of months you have to save it. Add the amounts together to come up with the total sum you’ll need to set aside each month or pay period.
For instance, I have to save another $500 for my vacation and at least $100 for a new pair of exercise shoes. I have four months until vacation and will need new shoes within the month. $500 divided by four months is $125 per month.
That means I’ll need to save $225 in the first month and $125 each month afterward for the trip. Or, I can save $100 for the shoes in the first month and $166 in the following three months for vacation.
Check Your Calendar
Before setting a firm budget, peruse your calendar. Look for any extra income that will be coming up within the next several months. Are you expecting a bonus from work or is your birthday in the near future? Will you be receiving a tax return this spring?
Apply this information to the amount you’ll need to save each month. If you can set aside a little more around your birthday or tax day, you may not have to save quite as much every other month.
Set a Budget
To save money effectively, you have to set a budget first. Subtract your rent, bills, food, and other essential expenses from the amount you’re expecting to make. Then budget what’s left for recreation spending and savings. If you don’t have enough leftover for your savings, you may need to extend a deadline or move something else to your wish list.
Remember when you’re trying to save money that it may require cutting back in other non-essential areas of your budget. Look for ways in your daily life that you can be a little more frugal. For instance, bring lunches from home to work, rather than going out for lunch every day.
Consider Investing
When you’re looking for tips on saving money, one piece of advice you’ll find time and again is to invest for long-term goals, like retirement.
Take advantage of mutual funds, high-interest savings accounts and a business or individual retirement account to help you build up the amount of money you need (or even more) over time.
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Photo Credit: LotusMonger, Beth Jusino, Philip Chapman Bell, photosteve101, daihung, Emma Brabrook, Wirawat Lian-udom
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