Whatever you want your money to do, setting savings goals can help you get there.

Research has shown that people who set themselves regular savings goals put aside more every month than those who don’t. Obviously in today’s tough times, not everyone has money to spare. But if you do, working out exactly what you want from your money can give you more of an incentive to save.

Getting started

Setting yourself a savings goal, such as putting down a property deposit or buying a car can help you to be more disciplined about saving, and you might end up putting aside more than you might otherwise. It’s a bit like when you have a list of things you want to get done on a particular day, you normally get far more done than if you don’t write it all down.

In the current climate, when interest rates are so low, having money in a savings account may seem a bit pointless. But the benefit of saving is that you’re giving yourself options for the future. It may be that:

  • You want an ‘emergency fund’. If you have savings you can pay for things like a car repair or new boiler without having to borrow money. Find out more about how to go about this in our guide How to build an emergency cash buffer.

  • You want a safety net. With three months’ expenses in the bank you’ll have a cash cushion if your hours are reduced or – even worse – you lose your job.

  • You want a holiday. It might not be possible now with coronavirus restrictions, but imagine going on holiday. It’s as restful or as exciting as you’d like it to be. Now imagine coming back from holiday and not having to worry about credit card bills. How might that feel?

  • You want to pay off your mortgage early. Imagine being debt free at 55 – or even earlier. It’s not something we can all achieve, but, at a time when quite a few people retire with a mortgage to pay off, getting rid of your mortgage early is very attractive.

Look back as well as forward

Looking back at what you’ve done well and what hasn’t worked financially can help you improve the way you manage your finances and set goals going forward. For example, you could try:

1) Write down three things you’ve not done well financially since the start of the year

It could be that you’ve paid off your credit card debt, paid more into your pension or that you’ve switched your mortgage for a better deal.

2) Writing down three things you’ve not done well financially since the start of the year

Maybe you didn’t pay your credit card bill on time and ended up paying a late payment fee. Perhaps you blew the budget on holiday and are still paying it off, or maybe you have savings that are earning a paltry rate of interest.

3) Working out your priorities for the coming months

In the run up to Christmas it’s easy to spend far more than you’d planned to. So it’s even more important to plan and decide how much you can afford to spend and where you’d like to save. Setting specific objectives is a good way to stay motivated, even if it’s only possible to set a small amount aside each month.

4) Keeping a weekly diary of spending

This can be a good way to keep track of outgoings and there are lots of great online tools and free apps available to help with this. Find out more about these in our article Top money-saving apps.

5) Making small changes to free up extra cash

Making small changes, such as bringing coffee to work in a flask and making a tasty packed lunch instead of buying lunch, are easy ways to make considerable savings and increase long-term financial security. Find out more in our article How to save money – 17 money saving tips.

6) Be realistic about how much you can afford to put away

It’s better to start small and then to increase your savings rather than to set yourself an impossible target. You should also think about when you’re hoping to achieve your objective, whether that’s a few months or several years, so you have a clear date to aim for.


If you have debts you should try to pay them off before you start saving. If you have debts that are charging different rates of interest, start by paying off the most expensive one first then work your way through your debts until they’ve all been cleared – but make sure you can always pay enough to keep within the terms of the contract on your other debts. This will get your money working in the most efficient way possible.

Where to save

If you’ve got a short term savings goal and you’ll need your money in the next couple of years, set up a standing order into an savings account for a sum that’s affordable.

Choose an account that makes it a bit difficult for you to get at the money (one that doesn’t come with a cash card, for example), so you have to think before you raid your savings. But make sure that if you find you really can’t do without the cash you won’t be penalised for withdrawals. Fixed rates savings bonds or Cash ISAs can be a good place to start. You can find the best Cash ISA rates in our article Best cash ISA rates – which cash ISAs pay the most interest? and about fixed rate bonds in our guide Fixed rate savings bonds explained.

If you’ve got a longer term savings goal which is five or more years away, and you’re comfortable accepting a level of risk, you might want to consider investing. This could give you potentially higher returns than a cash savings account, although there is a chance you could get back less than you put in. Find out more about whether investing could be right for you in our guide Investing – the basics.

Have you found that setting savings goals makes it easier to save? You can join the conversation on the Money section of the Community forum or leave a comment below.


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