Much of financial planning and money management is about having a goal in mind. You may be saving a certain amount each month for your retirement, the holiday of a lifetime, or to help a loved one get onto the property ladder.
But sometimes, life can be more complicated than just taking one step at a time. You may have multiple financial goals that you’re working towards at any one time, and that might make it harder for you to make plans.
As such, read on to find out five tips to help you save towards multiple financial goals more efficiently.
1. Define your goals
The first step in financial planning is to figure out exactly what goals you are working towards. You should not only consider your short-term goals but those further away, too.
Think about everything you might need to save towards. Your financial goals will depend on your personal situation, but some examples could be moving home, helping your child with university costs, or an early retirement.
It’s important to consider everything you may want to put money away for so that you can allocate your savings accordingly.
2. Create a priority list
Having created a list of saving goals, you can now organise them in order of priority. Typically, your short-term goals will be the highest priority, and your long-term goals will fall to the bottom of the list, but it is also worth analysing them in terms of overall importance.
You don’t want to put all your spare income into your short-term savings goals and neglect those that are further away. Depending on your intended lifestyle once you stop working, a strong retirement income may be just as important to you as buying your first home.
3. Figure out how much you can save
Once you’ve figured out the order in which your goals take priority, you can more easily allocate how much of your income should go towards each of them.
Firstly, consider how much you spend each month on essential items like food and bills, and take that away from your total monthly income.
Then, take away the rough amount you spend each month on personal treats and purchases, like meals out and day trips. You can then allocate the amount left over to your savings goals.
4. Look for ways to increase your income
Once you know how much you can save, and you have identified where your extra savings will be going, you can look for ways to maximise your saving capacity by increasing your income.
You could either look for ways to make more money each month or find ways to maximise the savings you put away with your current income.
To achieve a higher monthly income, consider using your skills to freelance on top of your usual work hours, or monetising one of your hobbies. For example, if you play a musical instrument, consider offering to perform at social events, or if you are a painter, try offering your services online for commission.
Alternatively, you could look at saving more of your current income. Maximising your available income is all about budgeting, so if you think you may be spending too much on treat purchases each month, set yourself a limit and put any further savings towards your goals.
You may also want to try and alter your saving methodology. If you currently put away whatever is left of your income at the end of the month, consider saving a fixed amount first and spending what is left over.
This way, you can guarantee a certain amount of savings each month and you can be stricter on yourself with the remaining amount.
5. Work with a financial planner
One of the most effective ways to get the best from your finances, no matter what you’re saving towards, is to work with a financial professional. Financial planners like us can help you through every stage of financial planning, from identifying goals to creating a budget and a plan.
When formulating a plan, we consider both your financial goals and your personal aspirations. We may consider your income, the size of your pension, your existing investments, and more in order to see whether you are on track to achieve what you want.
Plus, we can use specialist tools like cashflow forecasting to predict how your financial situation may change over time following the plan we make together. We will also hold regular review meetings with you on your journey to ensure you stay on track – whatever you are saving for.
Get in touch
If you’d like to find out more about what we can offer, please email info@investmentsense.co.uk or call 0115 933 8433.
