THE BROKEN WALLET

*Disclosure: This page may contain affiliate links. We receive a small commission if you purchase something we recommend (at no cost to you). All opinions remain our own.

How to set savings goals you can ACTUALLY achieve?

Setting realistic savings goals is one of the first steps to becoming a better saver. But too often, people set goals that are either too ambitious or too easy, making it difficult to stay consistent. In this post, we’ll explore how to create a savings plan that actually works for you.

1. Personal Finance is Personal

Just like people compare material possessions, they often compare savings, investments, and other financial milestones with others. However, it’s called personal finance for a reason. Therefore, the way you spend, save, and invest won’t be the same as someone else’s. Remembering this is key when planning a savings strategy.

In some friend groups, people are very transparent about their savings goals. With that being said, if your friends have more than you, it might make you feel like you’re behind or that you need to play catch-up.

This can result in setting unrealistic savings goals that are difficult to maintain.

There’s nothing wrong with adjusting your strategy to grow a bigger nest egg, but financial progress isn’t always black and white.

Just because a friend saves their first $50,000 or $100,000 before you doesn’t mean you’re moving in the wrong direction. There are so many factors that influence savings levels, and even if you have much less saved, you could still be in a good place given your circumstances.

Focusing on someone else’s financial journey only takes away from your own. (Related: Download your mindful spending MONEY MINDSET BULLET JOURNAL — it’s your personal spending coach). 

2. Don’t Aim Too High

I’ve heard of people creating savings pacts with friends, where they all agree to save a specific amount of money within a certain timeframe. Maybe it’s $3,000 over six months, or they turn it into a race to see who can save the fastest.

These money saving challenges can be fun and add a layer of accountability, but you have to be careful.

If you’re not in a position to save that much within the set timeframe, you might be setting yourself up for disappointment. This applies even if you’re saving on your own.

Part of being realistic is being honest about your financial limitations. While it might feel good to say, “I’m going to save $500 a month,” realistically, you might only be able to save half that.

3. But Don’t Aim Too Low Either

The best way to set a realistic savings goal—one that isn’t too ambitious or too low—is to review your budget first.

I talk a lot about budgeting, and for good reason. If you watch any general personal finance video, budgeting will probably come up at least once because it provides a foundation for all money goals. A budget doesn’t just create a plan for your money – it also reveals spending habits that might prevent saving as much as possible.

Tracking your expenses for two or three months can be eye-opening. You might think you’re only spending $100 a month on eating out, but it’s actually closer to $200. Or you might assume your subscription services cost $50 a month, but they really add up to $100. These small money leaks can add up fast.

You don’t have to cut out non-essential expenses entirely, but balance is key. Cutting back on dining out, entertainment, or unnecessary shopping – even by half – can free up more money for savings.

4. Make Savings Goals Bite-Sized

Another helpful strategy is breaking large savings goals into smaller, manageable ones.

Let’s say you review your budget and determine you can realistically save $5,000 over the next year. Instead of focusing on the big number, break it down into weekly goals. Instead of saying, “I’m going to save $5,000 between January and December,” shift your mindset to, “I’m going to save $96 a week.”

Large numbers can feel intimidating, especially when you’re starting from zero. Even if saving $5,000 is doable, the finish line might seem far away, and if your progress feels slow, you might lose motivation after a month or two.

5. Learn From the Past

If you’ve set savings goals before and didn’t achieve them, take some time to reflect on what went wrong.

There are many reasons people fall short of their savings goals, and it often extends beyond simply not earning enough. That’s why self-reflection is so important – it helps you understand the factors influencing your behavior.

If you can pinpoint why a past goal didn’t work, you can do the opposite and plan better this time. Maybe you didn’t leave room in your budget for fun, which made saving feel restrictive. Perhaps you were exposed to too many spending triggers, or the people around you weren’t supportive of your financial goals.

For some reason, people love to poke fun at others who are frugal or trying to improve financially – I don’t really understand it. But either way, looking at past challenges can help you figure out what hasn’t worked so you can adjust your approach moving forward.

6. Expect Setbacks

Life happens, and no matter how well you plan, something unexpected can pop up and throw you off track. That’s why it’s so important to expect setbacks and mentally prepare for the possibility of adjusting your timeline.

If you go into a goal knowing that things won’t always go perfectly, you’re less likely to get discouraged. This is important because discouragement is what causes most people to give up. It’s hard to stay positive when it feels like you’re constantly taking two steps forward and three steps back.

If you feel like giving up, a couple of things can help. First, look back on the progress you’ve already made. Even with a setback, you’re probably still closer to your goal than when you started. Second, remember that you’re not alone. Many people experience financial roadblocks, yet they still manage to reach the finish line…and you can too.