How to set and reach your saving goals

How to set a saving goal

Before opening an account, or trying to cut back on sushi, there’s one really important step in the home-buying process — setting your goal.  Over 380 tests have shown that goal-setting has a significant impact on your behaviour. So, by taking this one step, you’re likely to want to take the next one (and the one after that, and the one after that…)

But how do you set a saving goal? Well, you need to get specific. “I want to own my own home” is your dream. Your saving goal should capture exactly what you want to achieve with clear numbers, as well as how long you’re going to take to get there. For example, something like “I want to save a £30,000 deposit in the next 5 years so I can buy my first home”.

What is a good monthly saving goal?

As a rule of thumb, a good monthly saving goal should be putting away 20% of your take-home pay. A useful rule to follow is the 50/30/20 rule - 50% of your income should go on necessities (rent, bills, food etc.), 30% should go on wants (gym membership, take away coffees) and 20% on savings. But everyone’s financial situation is different. It might be that your necessities take up 60 or 70% of your take home pay, making it harder to save 20%. If you can’t afford to save this much each month, set your target as something that is realistic and achievable.

Read more: How to save for a house

How long will it take to reach my saving goal?

Once you’ve worked out what you can put away each month, revisit your saving goal and see if it’s realistic you’ll achieve your goal in the time frame you originally set. If you have ever felt a big saving goal like buying a home is so impossible that there’s no point in even trying, setting a goal can put things into perspective. You might find that actually, that huge house deposit goal, when broken down month-by-month, is totally possible.

Don’t be discouraged if you have to adjust your timeline to be longer than you originally wanted - you can always adjust this if you find you save sooner, for example you get a raise at work, or have a couple of months where you don’t spend as much on wants.

How to save for multiple goals at the same time?

There can be a lot of things you want to achieve in life - travelling the world, buying a house, starting a business, getting married, starting a family….the list goes on. Some of these goals you might be trying to save for at the same time.

If you’re trying to save for multiple goals at the same time, make sure you know exactly how much you want to save for each, and the timeframe to do this in. This must be realistic - can you put aside enough each month to hit all your goals? It might be that you have to prioritise one goal over the other for a while, based on which saving goal is the most important.

How to prioritise your saving goals

If you’re trying to save for multiple things, it can be hard to prioritise your saving goals. If you have 17 different goals, you might struggle to reach any of them or keep track. Instead, keep your saving goal list short, and group them by needs, wants and wishes. That way, you can work out which goals are most important to you, and what can maybe be a goal for later down the line.

How to reach your saving goals: 

1. Set realistic goals

If you want to achieve your saving goals, they need to be realistic. It’s disheartening to set goals that you cannot hit, even if you’re being really frugal. 

2. Write your saving goals down

A good way to help you achieve your saving goals is to write them down. In fact, people who write down their goals regularly are 42% more likely to succeed than those who don’t. And when you set (and refine) your goal in the Tembo Lifetime ISA app, you go through the same process.

3. Track your progress

Another way to help you stay focussed on your saving goal is to track your progress and look back on it regularly. “One of the most motivating things we can experience is evidence of our progress” says James Clear, Author of Atomic Habits. Motivation happens when you get a spike of dopamine (aka: the happy hormone). These spikes appear when your brain gets positive reinforcement from completing a task or seeing progress.

4. Take an honest look at your spending habits 

If you find you’re not making as much progress with your savings as you thought you would, it’s time to take a hard look at where you’re spending your money. It might be you spend more than you think on going out, clothes or small purchases that add up.

But make sure you don’t beat yourself up if you have a bit of a splurge, or there are other factors outside your control which impact your ability to reach your goal. There are some things that you (and we) unfortunately can’t control — unplanned expenses, house prices, and tough mortgage eligibility criteria. Thankfully, there’s one thing you can control — you. Take your savings day-by-say, and stay focussed on what you can do to achieve it.

Take a look at these 17 ways to smash your savings goals in 2024.