When it comes to achieving your financial goals, a winning attitude is more important than a head for numbers, writes Barbara Drury.
Thinking about an overseas trip or the purchase of your first home can be a lot of fun, but saving for these big-ticket items can be daunting. Perhaps you think you don’t have the discipline or the financial skill to achieve your goals.
That was certainly the finding of a survey on women’s financial priorities for 2016 by 10thousandgirl, a not-for-profit provider of “financial wellbeing” programs for women. It found many women felt they were held back from pursuing their financial goals by a lack of discipline (63 per cent), knowledge (43 per cent) or skills (42 per cent).
The good news is that you don’t need to be a financial whiz, deny yourself simple pleasures or wait for a big pay rise, to save for a major goal.
“It’s more about your attitude and the systems you put in place,” says 10TG founder Zoe Lamont.
Lamont says the first step is to be clear about your goals and make sure they are realistic. For example, if you are saving for a home deposit then speak to a mortgage broker or your bank to help you set a realistic target.
Then you can start planning your finances. If you don’t already have a budget, look at your income and expenditure to work out how much you have left over each month to play with.
Pay yourself first
All the experts agree that the most painless way to build savings is to set up a direct debit from your regular salary into a high-interest savings account.
“Make savings your first expense,” says Supersolve Financial Services principal adviser Nicholas Sheather. Supersolve is a representative of Financial Services Partners, owned by ANZ.
If you already have a mortgage, Sheather says you could direct savings into a mortgage offset or redraw account. This has the added benefit of helping reduce your mortgage interest payments.
Even if you are on a modest income, Sheather says to tip any windfalls such as bonuses, tax refunds or pay increases straight into your savings buckets.
Once you have a savings plan, the next step is to keep yourself accountable and motivated.
“Work with your own personality,” says Lamont. If you are a words person, write your goals and your progress down in a diary; if you are visual, get a vision board and pin up pictures of your holiday destination, car or dream home.
By keeping your goals front-of-mind in this way, Lamont says you will automatically pick up tips along the way. You may hear a conversation on the radio or talk to someone at a barbecue who has done it all before.
Share your goals
Sharing your goals with a friend or professional adviser is also a good way to stay the course. When doubts, procrastination or impulse control get in the way, they can urge you to keep going.
“Professional athletes don’t achieve their goals without a coach or mentors,” says Sheather. They also break their big goals down into smaller short-term targets.
If you have a two to three-year savings goal he suggests breaking it down into three-monthly sub-goals. When you hit these targets, reward yourself in a small way.
“Like an athlete or a dieter, you have to do it bit by bit,” he says.
Ultimately, success is the biggest motivator of all. Lamont says when you’ve done it once you’ll know you can reach even bigger goals and you’ll no longer say “I can’t save”.
Seven steps for savings success
- Set a realistic savings target
- Create a budget you can stick to
- Direct debit savings into a separate account
- Add extra cash (e.g. a bonus) into your savings
- Keep your goals top of mind
- Involve friends and family
- Break down big goals into small steps