Saving for the future may seem difficult and a waste of time when you just make it through the month. But setting long-term savings goals and saving towards them will help you afford the big things, like a house, a car, education and retirement. Here’s how to get started and be WalletWise.
What are long-term savings?
Long-term savings goals can take a few years to reach – usually periods of more than 60 months, depending on your financial institution. You earn more interest than you would on short-term saving goals, so it’s important to find the right savings account for you.
Examples of long-term goals include:
- A house
- A car
Follow these five golden tips to help you reach your long-term savings goals:
- Have a budget so you know how you spend your money and manage it better. Make sure your budget includes your expenses and an affordable amount that you know you can save each month.
- Have a separate savings account that suits your long-term savings goal. If you are sure you will not have to draw money from this account in the short term, take a longer-term agreement so that you earn more interest. It can be 32 days’ notice etc. If you think you may need to have to access this account for emergencies, then you will need a shorter-term savings agreement.
- Make sure you understand the terms and conditions of the account. How much interest will you earn? What are the conditions of withdrawing from the account? What are the bank fees?
- Save towards a goal. Saving without a goal in mind is like kicking a ball aimlessly around the field. Having a goal in mind helps you keep track of how much more you still need to save to reach it.
- Make sure your savings goals are ones that you can reach. Remember, if your goal is buying a house, you don’t have to save for the WHOLE price. You just need to save towards being able to pay for the deposit and the transfer fees. This is far less than the whole price of the house. Then, if you go to the bank and show them that you can pay a small amount of the purchase price, they might be more willing to lend you the balance or remaining amount, because they can see that you are financially responsible.
Saving for long-term goals requires some discipline and, sometimes, sacrifice. But it will be worth it in the long run when you are able to move into your own house, drive your own car and pay for your kids’ education and your retirement. Save your money now and be WalletWise.