Wondering how to save money for long term goals like traveling or a big purchase? Here’s exactly how to get started.
1. Separate Your Money
I keep separate savings accounts for separate goals. That’s why I’m the proud owner of seven different savings accounts just in my personal finances. Putting all your money together in one pot makes it difficult to see progress. It also makes it difficult to know which dollars go where.
If you’re saving for a trip to Japan AND a birthday present for your boo and they’re all in the same account as the money you use for rent, you could easily spend your savings just by trying to pay your rent.
2. Open a savings account for each big-picture goal
For this trip, I designated money to an account nicknamed ‘Travel’ each month. I hit my goal in four months since I could track how much progress I was making and I didn’t spend any of the savings.
Create a separate account to save for long-term goals to track your progress so you won’t accidentally spend it.
3. Save Early
I’m currently saving for a down payment on a house. I don’t plan to buy said house for another two years.
But you know what, houses are expensive and I can’t just pull $20,000 for a downpayment out of my butt in the two months before I want to buy a home.
So I’ve started saving a little each month NOW, way before I need the money. This is all due to budgeting and having a handle on my money.
You can’t save anything if you don’t know what’s coming in or going out.
You especially can’t save if you’re falling victim to spending triggers or lifestyle inflation. Budgeting helps control all of that and point your money where you *truly* want it to go.
Starting to save in advance works really well for long-term goals since, you know, they’re long-term. A little at a time adds up to big numbers, but won’t break your budget each month.
I work this savings into my values-based budget. Our workbook takes you through exactly how to set a goal and make space for it in each month’s budget so you can do the same thing!
4. Know Your Number
Want to know my personal finance blogger secret? I DON’T AUTOMATE MY SAVINGS!
Every article you read about saving will tell you to automate, and it’s great advice. If you can, you should. So why don’t I?
Two main reasons: I love manually moving money around in my accounts. I get a genuine pleasure from it, and I like spending time with my money on the regular.
Second, as a freelance worker, my income varies from month to money. Sometimes just a few hundred dollars, sometimes a few thousand. Setting up an automatic deduction means you have to pick an exact day for the money to be transferred. Frankly, I don’t always have the money in my account on the same day every month.
Still, I’m a prolific saver. I know how much money I need or want to save in order to hit my goals and I set a timeline for myself. For this trip, I saved about $4,000 in four months. Some months I saved a ton of money, and some months it was only $200. I still hit my goal in time.
Knowing my savings number, having a budget I stick to religiously, and when I want to spend the money gives me both a goal and a timeline. For someone like me, this is enough to save the money month to month.
How I Used These Tips to Save for a Big Trip
I’m currently traveling for two and a half weeks out west. I’ll visit Seattle, Portland, Salt Lake City, and Jackson Hole before I touch back down in Austin.
This is a trip for both work and pleasure- I’m visiting friends and enjoying a vacation out of Austin, and I’m also speaking at a conference and continuing to write.
I started planning this trip about four months ago. I’m in love with the PNW, and I have several close friends in the area.
I knew I wanted to spend some time here, and I was determined to make it happen this year, even though I also started a company this year. NBD, just living la vida loca over here.
This Trip’s Finances
I’m not stressed about money on this trip. Once I decided to take this trip I immediately started saving for it. All of the big expenses, like housing and plane tickets, have already been paid for.
I’ve got cash dedicated to the on-the-ground costs of food and transportation. This trip won’t impact any of my other savings goals for the year, and I’m not going into debt to take it.
Likewise, I’m not stressed about working from the road, because everything is in place for me to be able to do that. I knocked out my biggest projects before leaving Austin, and I’ve built time for work into my travel scheduling.
Let me tell you, I have not always been this Zen about my travel and work life. Since I’ve never had a full-time job, I’ve always been pretty location-independent. And I’ve taken advantage of that and managed to do a fair amount of travel on my small income.
This time around, I planned this long-term goal out to a T. And that has made all the difference!
I started saving for this trip four months before I took it. I started planning this trip four months before I took it. Everything that could be planned has been planned.
So now I’m straight chilling, enjoying my coffee and sightseeing, and keeping up with my inbox.
The Importance of Savings
I’m a planner and a saver. I’ve more recently come into the former, but I have always been the latter. When I was a kid I was meticulous about saving, keeping all my birthday cash in a shoebox under my bed. (#secure)
Learning the habit of saving as a child has helped me immensely in my adulthood. Even before I became a personal finance nerd I always kept savings accounts.
I may not have had a specific purpose for the money, but I knew the general rule was that savings were good.
Saving any amount of money for any goal is great. Americans have a hard time saving, thanks to a system that pushes credit down our throats, and increasing cost of living paired with stagnant pay.
Six in ten Americans say they can’t cover an unexpected $500 bill. That’s a hard way to live, but it’s the reality for many people.
The truth of the matter is that saving for long-term goals is very hard for poor or low-income people. When all your money and energy go into getting by, it’s hard to think of anything besides what’s in front of your face.
It’s hard to believe there is a future worth saving for when there’s barely enough to sustain you day to day. It’s expensive to be poor, and it affects the way we think about ourselves and time.
Ultimately, to save for long-term goals requires believing that there is a future worth saving for.
It means pushing off the short-term satisfaction you crave. This applies no matter your income level- it’s just harder for low-income people.
Tell me how you successfully save for long-term goals!
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