How Setting Savings Goals Is Important In Financial Management - Tips To Set Savings Goals From DNBC
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Saving money is an essential practice that is encouraged for thousands of years of mankind. This financial management is a basic way to grow wealth and ensure a secure financial future especially for the uncertainties of life such as the Covid pandemic in 2020. Not only a good habit of saving money helps you overcome unfortunate events but also backs your family up in many circumstances. So, why do people save money? How important is it in financial management? Let's discover some reasons in this article and learn more about tips to set your saving goals.
How setting savings goals is important in financial management - Tips to set savings goals from DNBC
Reasons why saving money is important
Regardless of income, consumption, or stage of life, saving is necessary for everyone. Here are some reasons for starting to save money right away.
1. Capitalize on investment opportunities
Let’s imagine how would you feel when you see an opportunity to grow your wealth, namely a good deal of a property, or the stock market is on the downtrend or a proposal of business, while you don’t have enough money to capitalize for this great deal. It reminds us about the lesson of saving money. Sometimes, “cash is king” is right in some cases and if we have enough cash to grant for our investment, it is too good to be true.
2. Unemployment or layoff
We now know that for most people, job security is an illusion because of the coronavirus outbreak. You can be sure that your employment is secure if you work for the government. Job security continues to be unattainable for the great majority of people who are employed by companies.
In this VUCA (volatility, uncertainty, complexity, and ambiguity) world, no one can assure that our current companies are going to run well in the future, as a result, staff retrenchment is possible. In addition, finding a job is not easy in a competitive professional market. Therefore, a good saving amount can help you maintain your basic expenses and your family if any.
3. Emergency situations
This type of saving goal is the most important one. We only use emergency budgets for unexpected circumstances, which many people usually ignore or even are not aware of. In theory, you should plan for an emergency budget with an amount that enables you to live as in your normal lifestyle for 10 months. Then you can start to save for other funds that are less prioritized like investment or lifestyle and travel.
4. Holiday vacation
Traveling is beneficial for us, helps us learn new things, rest and recharge lifeforce after a hard working year. However, for some people, vacation is a sort of costly expenditure, and could break their bank accounts. In this situation, a smart budget to fund for these activities can balance your needs and financial health. It is better to plan ahead your trip with a detailed checklist of costs, and start saving your money 1 year in advance or it can be in the short term (eg: 6 months) of saving, depending on your level of income.
There are lots of jobs that have been replaced by robots and labourers have to improve their skills and knowledge to adapt with new job requirements. Pursuing higher education also helps employees get promotion in their job or move to another field that they are interested in. To achieve these goals, we need a solid financial foundation, and the paycheck-to-paycheck lifestyle will push you to financial risk and you are unable to level up yourself to obtain new opportunities.
6. Buy a house without debt
Few people can afford to buy a home without incurring debt. Even individuals who can afford to buy homes entirely, still use debt to leverage their purchasing power and acquire more real estate. It would be preferable to start saving for a down payment as soon as you decide to finance the purchase of a property.
You can lower the interest rate you will pay on the mortgage by making a down payment. Your prospects of paying a reduced interest rate on your bond are better if you make a larger down payment or even pay off the mortgage.
7. Get marriage and ready for family life
If you want to have a family in the future, it is sure that you need money to finance the wedding ceremony, having kids and tons of things that need to be prepared for years in advance. Having a family is a big decision, and it requires all of us to think carefully and be prepared in terms of finance to help us be free from loans and not getting into debt.
8. Early retirement
Early retirement is not a new concept, but very few individuals know about this. Many of us might think early retirement makes us feel bored when doing nothing, why do we have to rest and become useless while we are still in the working ages. In fact, early retirement prepares us for strong financial health, grants us enough money to live without worrying about tomorrow. Since the brain is released from weary status, it can work more productively and creatively. It means work for passion not for money, resulting in a happy and fulfilling life.
Well, it is obvious that we should save money as early and much as possible if we are looking for a life with purpose. We are going to have more time to love ourselves and give away what we have for unfortunate people.
How to set a saving goal
A fantastic approach to see your money increase is to set a savings goal. Let’s uncover where to begin and what your ideal savings target is.
How to set a savings goal - Tips to set savings goals from DNBC
1. Name your savings goals
It is crucial to define what your expectations are. It will not work if we bundle all funds into 1 basket. So, the best practice for that is to separate each objective apart and give it a name for easily tracking.
Not only that, but you should also rank each aim in order of priority to make it easier for you to gradually attain your financial objective.
2. Set a savings deadline
After making your clear goals, the next step is setting a deadline to accomplish them. Some objectives, like buying a car in a year, may be more immediate. Other objectives, such as reaching your retirement age, may take longer and necessitate more continuous planning.
Think critically about where your money needs to go first and work from there.
3. Create different accounts for different goals
Saving for numerous objectives can be challenging. Whether you are saving for a car, house, vacation, or anything else, separate each objective into a separate account.
You can find a bank or financial institution which supports you to open multiple saving accounts or you can split funds to many banks and manage them at the same time. It’s up to you!
4.Break down your goals and automate your savings
Depending on when you get paid, you can transfer funds to savings accounts. Some of us practice saving on a monthly basis, while others do so on a weekly or fortnightly basis. We should automate our savings by using the automatic payment features offered by banks to directly take money from your paycheck rather than doing it by hand to assist you stay on track at all times.
5. Keep track of your progress
Once you get the ball rolling, it is addictive to watch your savings grow over time. You're more likely to feel good about continuing after you realise your success. Naturally, once you achieve your objective, you may be inspired to keep working towards your other goals and create new ones.
About DNBC Financial Group
As a specialist in international money transfers, DNBC Financial Group is proud of our ability to collect payments from customers throughout the world, move money between international businesses, and lower the risk of currency fluctuations has allowed us to fast advance in order to benefit people all around the world. We are one of the world pioneers in the fintech segment that offer online payment services with 100% online registration process and round-the-clock customer service.
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