A savings goal provides insight into what you would like to have and how long it takes before you have saved that money together. By making your dreams and goals tangible, you create the opportunity for yourself to actually achieve those goals. But how do you set savings goals, and what kind of savings goals are there? In this article you can read everything about savings goals, see an example and we will tell you the best ways to keep track of your savings goals.
Why specify savings targets?
Every month, money is added to your account and you also spend money again. When you have your finances in order, it should be possible to put part of your income separately in a savings account every month. But if you have no goal in saving, you basically just look at a number which means nothing at all. A savings goal ensures that you know what you are saving for.
You have determined a final destination, where you are working towards by saving. So there is a very clear starting and ending situation. This makes it much easier to save and to be focused on achieving a goal. Naming your piggy bank or savings goal can also contribute to a greater motivation to actually achieve the goal.
Determine savings targets
Have you decided that you want to save purposefully? Then you must first start setting up those goals. But choosing the right goals can sometimes be difficult. There are quite a few savings goals for which you can put money aside. It is therefore especially important to set priorities in those goals. Below we give some popular examples of savings goals, why they are useful and how much you can best put aside.
Actually, everyone needs an emergency jar. Emergencies are situations that you could not have foreseen, but in which you have to spend a considerable amount. Think of expensive repairs for a car, leaking roof or unexpected healthcare costs. So you have to save a certain buffer for this so that you do not run out of money when these costs appear.
The ideal amount of such a buffer depends on your income and the monthly expenses you have. On the Nibud website you will find a buffer calculator. Here you can enter what your personal situation is, after which the buffer calculator indicates what amount is recommended in your situation.
According to this calculation, you will soon arrive at Nibud with an amount of more than € 15,000.
Save for a house
In the current housing market it is absolutely not easy to get a house. Saving money to make a down payment for a new home is therefore also a popular savings target. Because the more own money you can put in, the easier you can buy a house. In addition, you also pay less interest on the amount that you have deposited yourself, so that the costs of the full mortgage are even lower than without your own contribution.
Even now that you can no longer co-finance the costs of the buyer in your mortgage since 2018, you should soon have saved more than € 10,000, even before the house is officially in your name. As a savings target, it is best to strive for a personal contribution of 10-20% of the value of the house. For many double-income households, this is a goal that can be achieved within a few years.
Save for a car
Do you have a car that needs to be replaced sometime in the coming years? Then it is useful to start saving for that car. The best way to do that is to look at the value of a car you would like to have. Then you divide that amount by the number of years that you think your current car can still last. Then you can look at the depreciation of your car over the past few years.
This way you can see how much the car depreciates per year and you can also make a reasonable estimate of how much the car is still worth when you sell it or exchange it for a new car. That way you will quickly find out how much you have to put aside monthly to replace the car within a few years.
Save for a trip
Holidays are also a popular savings target. This can be as simple as a weekend away, but also a trip to the other side of the world where you stay away for several months. It is important to determine for which holiday you will save. Do you go on holiday several times a year and decide to save for next year’s holiday? Then you can of course not already withdraw money from the jar for a holiday that falls earlier.
So be especially clear whether you save for a specific trip, or whether you just put a fixed amount in a ‘holiday jar’ every month. In principle, it is easier to save for a specific holiday, because it is easier to set a goal for it. You do this by selecting a trip and checking what costs you expect to incur on the spot. That way you have a very specific goal, where you can put money aside every month to achieve that goal. You can of course also say that you put the entire amount of holiday allowance directly into the jar, without spending it on anything else.
Save to invest
If you really want to make good use of your savings, you can use the money you put aside to invest. You can invest the money for a supplementary pension, or perhaps for your children when they are older.
There are some ways in which you can invest relatively safely. An example of this is an index fund, because here you can determine how much risk you want to run with your investments. In general, the return with an index fund is always a few percent per year, which means that your capital gradually increases in value over the years.
It is also possible to invest in real estate, shares or gold. It goes without saying that you should know what you are doing, so that you do not just lose all your savings on incorrect investments. If you have savings that you do not have to use for other savings goals, investing is a handy way to have extra money in the long term.
Save for a renovation
The renovation of a house can make the house more valuable when it is sold. So you can also see a renovation as an investment in the future. It is therefore always a good idea to set aside money for this. There are a number of points that you have to think about in order to achieve a good savings goal.
- What exactly do you want to grow, and which parts of it are necessary?
- Can you spread the renovation over several years and always make a savings target for one part?
- Can you request quotes for the parts you want to rebuild? This way you know exactly how much money it will cost and what you have to save together.
- Are energy-saving or sustainable renovations possible – such as solar panels, heat pump or insulation – with which you can earn back your investments in the future?
On the basis of these questions you should be reasonably able to make a cost that you can use in the coming years. Dividing the entire project into pieces makes it much easier to determine when you have enough money for certain parts of the renovation.
Saving for children
Many parents start saving for later from the birth of their child. In this way they hope that they can give their children a good start in life at a later age. For example, when they live on their own, take driving lessons or study. It is generally known that students do not have too much space when they go to university or college. A little push can therefore be a good way to enjoy student time as much as possible.
Save for products
Almost everyone has a wish list of products they would like to have. Maybe you’ve always wanted to buy electronics that you didn’t actually have money for. By drawing up a savings section, you can still fulfill that wish. For example, you can set up savings targets for a:
- New television
- Beamer to experience your own home cinema.
- Large sound system
- New furniture for your home
- Electric bike
- Latest iPhone
Set monthly goals
Now that you know what kind of savings goals you can set, it is time to look at how you are actually going to put that money aside. Especially when you set multiple savings goals, it can be difficult to keep an overview of how much money ends up in which piggy bank at the end of the month. It is therefore first important to add up all savings targets and the corresponding amounts. You then know exactly what amount must be distributed in total among the goals.
How you then distribute the income monthly among those pots is of course entirely up to you. Do you feel that you want to put a certain goal forward and that another goal is becoming less important? Then you can of course also change the percentages in between.
It is useful to keep track of how much money is invested in each savings goal. You can choose from two different options to do that.
Keep track of it yourself
When you keep track of how much money has been invested in a certain savings target, you can use a single savings account to which you transfer all the money for your savings targets. However, you should pay close attention to how much money you have already saved for a certain savings goal.
It is best to do this in a separate document on your computer or on paper. You make an overview with the name of the savings target and then write down how much money you want to allocate to that goal every month. So you simply divide the total amount that you have transferred over all savings goals. At the end of this article, you can read more about the options for keeping good records of your savings goals.
You can create a separate account for each savings target. With many banks it is possible to create these kinds of piggy banks, without having to pay extra costs. This works very simply because you can transfer a specific amount to a specific piggy bank every month. You do not have to keep anything yourself because you can immediately see how much money is in each jar when you log into your account.
Watch for inflation
When making the savings targets, it is often useful to include inflation in the calculation. In short, inflation is the depreciation of your money. This means that what you can buy today for € 10,000 will cost € 13,000 in 10 years. You should mainly take this into account when you have a savings target that you only achieve in a few years. In some years, inflation is around 1%, but it also sometimes exceeds 3%. This can have long-term consequences for the value of your savings.
Evaluation of savings targets
Although you should not be busy looking at your savings goals every day, it is useful to do a monthly and an annual evaluation. During every monthly evaluation you can see whether the assessments you made were correct. Who knows, you may find that you can actually save a lot more money than you initially thought, but it could also be that you suddenly get unexpected costs. By looking at the current situation every month, you can easily make changes to the savings target if necessary. In the annual evaluation, you can also look at the influence that certain major changes had on your savings goals. You may change jobs, a savings target has been dropped because it is no longer necessary or your income changes drastically.
Example of a savings plan with savings goals
Let’s look at an example of a family with savings goals. We choose an average family with two working parents, who both earn € 2,120 per month. They have two children and a dog.
The family has 3 savings goals:
- A new car within 4 years: € 17,000
- Next year with the whole family (without a dog) on a flying holiday to the Maldives: € 3,500
- For both children (4 and 9 years old) an amount of € 5,000 when they turn 18
savings target The car that the family now has will probably generate 5,000 euros when it is sold in 4 years. That means that there is a gap of 12,000 euros to buy the new car. To close that gap, € 12,000 must be saved for this purpose within 4 years (48 months).
Car savings target: € 250 p / m
Holiday savings target
The family has wanted to go on a long journey for years, but never had the money. The entire trip, including flight, accommodation and a dog hotel for the dog costs 3,500 euros. Because they will leave in exactly one year (12 months), € 3,500 must be saved within that time.
Holiday savings target: € 291 per month
Child savings target Child 1 has 14 years to go before he is 18 years old. So the parents have 168 months to save 5,000 euros. That is 30 euros per month. Child 2 has 9 years to go before he turns 18. That’s 108 months to save 5,000. That means that the parents have to set aside 46 euros per month.
Savings target children: € 76 per month
In total, the family must therefore save 617 euros per month to achieve the three savings goals. When the family has made the trip, that amount will be halved in one go because the monthly contribution of 291 euros is lost. When they are able to structurally keep 600 euros per month, they can set a different goal in exchange for this goal.
How do you keep track of your finances and your savings goals?
When you have set up the savings goals, it is important to keep track of how far you have already gone in collecting the required amount. It is also useful to see if you are still on schedule. Above in the article you already read more about the two ways to keep track of how much money is in a particular jar. But even if you open a separate account for each savings target, it can be useful to also keep an administration. It is likely that you will not be able to set aside the same amount every month. In other months, it is possible to put more money aside, which means that you may reach your savings goal sooner or later. You can use the following four methods to ensure that you always maintain insight.
The household booklet is a document in which you keep track of all household expenses. So it is also an ideal place to write down your savings. Especially because you can see for yourself how much expenditure you had and how much money you have left over to save. By linking your savings goals to your household booklet, it is very easy to see which expenses had an impact on (not being able to) achieve your savings goals.
When you use a notepad, you do that to see at a glance how much money is in a particular jar. For example, you can create a table with different columns for each savings target. Then enter in the table how much money you have saved in total and how much money has ended up in each savings goal. By doing this monthly, at the end of a year you have a very clear overview with which you can make new plans for the next year.
Excel is very useful if you plan to save certain percentages of your income. Suppose you are an entrepreneur and do not have the same income every month. Then Excel can be useful because it allows you to create formulas yourself. For example, you know that you need at least 1,500 euros every month to make ends meet. Suppose you have an income of 2,500 euros this month. You then enter this in the table, after which Excel automatically calculates that you have 1,000 euros remaining after deducting your expenses. You can then set that you want to set aside 10% of that € 1,000 per savings target. This way you never have to calculate yourself again and you only have to enter your monthly salary. Then you immediately see how much money you have to put in your piggy bank that month.
You can also choose to use an app when creating savings goals. Almost every app from a large bank has a way of making piggy banks and keeping the administration for that. Examples are ING, MoneYou, Bunq, knab and ABN AMRO. But you can also use the Thriv app. This app allows you to create an unlimited number of savings goals, of which you can continuously see how much money you still need. How can you view the statistics after a while making it very easy to see if you are still on track with your savings goals.
Savings goals are important. Firstly, because it gives you much more insight into your expenses. But also because you are able to buy things that you would really like. Despite the fact that a savings goal does not ensure that you have more money, it is precisely that awareness of your spending pattern that can ensure that you achieve the savings goals