The key to reaching any goal—say, running a mile without stopping or acing a science test—is planning out how you’re going to get there. The same is true for saving money. Whether you’re trying to save $50 for a new video game, $150 to see your favorite singer, or even more, these five time-tested steps will help you succeed.
Step 1: Get Specific
Decide exactly what you want, and research how much it will cost. Do you want $20 headphones or wireless Beats headphones that could cost eight times as much? Before you start saving money, make sure the item passes the one-week test: If you still want those headphones after a week, you’re ready to take the next step.
Step 2: Set a Time Frame
Is this a short-term goal that you’d like to achieve by the end of the month or a long-term goal that could take years to reach? In an ideal world, we’d all get what we wanted immediately. But that’s not always possible. Waiting for something, which is called delayed gratification, is difficult, but it’s an important skill. The next step will help.
Step 3: Establish Benchmarks
Break your goal into smaller steps, also called benchmarks. For instance, Lauren is trying to save $700 for a school trip. If the trip were a year away, she could set benchmarks by dividing the total cost into an amount she could aim to save every week of the year. (The math: $700 ÷ 52 = $13.46.) Doesn’t that seem more manageable? “People don’t meet goals when they bite off more than they can chew,” says behavioral economist Sarah Newcomb, who studies why people don’t always behave logically when it comes to money.
Step 4: Picture Success
Cut out a picture of the bike you’d like to buy or the amusement park you’d like to visit. Hang it where you’ll see it every day. The image of your goal should help keep you on track. Another way to reinforce your commitment is to imagine overcoming a potential obstacle to your goal. Let’s say you know you’ll be tempted to spend money at a school bake sale. Come up with a strategy for overcoming the temptation, like bringing in an extra treat.
Step 5: Track Progress
Stay motivated by checking your savings progress regularly. Give yourself a pat on the back when you’re one-quarter, one-half, and three-quarters of the way toward your goal. If you miss the mark, evaluate what went wrong. Did something turn out to matter more to you in the short term? Or did your goal turn out to be too challenging?
“Look at it as a learning opportunity,” says Robin Taub, author of A Parent’s Guide to Raising MoneySmart Kids. “Everyone fails, and that’s when you grow. Use the lessons you learned to save like a pro for your next goal.” —By Hayden Field