A secret to savings success? Goal setting! Start here

Last updated on 12th December, 2018 at 09:10 am

Your roadmap to setting up your short-, medium- and long-term goals is here. 

It’s pretty tricky to navigate quickly, efficiently and stress-free without pre-planning where you’re going… a life lesson true whether you’re driving in a car or trying to improve your savings. Which is why goal-setting around your savings is key.

Another important part of succeeding at saving? Ensuring your goals are attainable, because if they’re too far-fetched, you’re far more likely to give up.

“It’s important that you first identify a tangible need or goal to save for, otherwise you will likely always find a reason to spend your money on other things,” stresses Conrad Koorts, a certified financial planner and investment specialist. “Once you’ve identified a need or goal towards which you seriously want to save, it becomes physically tangible. The stronger your desire to reach your goal, the more likely you will stick to your savings plan.”

Another important factor? Being able to see you move successfully close to your goal. “It’s helpful to always have a yardstick with which to measure your savings progress. As financial guru Warren Buffett points out, you will then be incentivised not to save what is left after spending; but to instead spend what is left after saving.”

Okay cool – but where do you even begin? Start with identifying your savings targets according to three categories: short-, medium- and long-term goals. “These three sets of goals require different financial products, structures and time horizons in order to achieve them,” says Koorts. “Once you have these mapped out, you can then seek the help of a financial planner to tailor your savings and investment strategy accordingly.”

So what should you save for in the short, medium and long term?

Short term

A short-term goal is something that you would like to achieve in the near future, say within one to three years. This might include:

• Setting up an emergency fund;
• Paying off debt (your credit card, clothing account, other debt);
• Further education for yourself;
• A car;
• A wedding/honeymoon fund;
• A deposit on a house/apartment; and
• A holiday abroad.

“Bear in mind that your goals should be aligned with your ability to save,” adds Koorts. “If, for example, you don’t earn enough to save for a car within a year, you need to extend the savings term or find other ways to make up the shortfall. Likewise, you should also ensure that you select the most suitable savings options that will allow you to achieve your goal. The best way to keep you on track – and to make your goals tangible – is to consult with an experienced financial planner.”

Medium term

Medium-term goals are those that you feel you can achieve in the next five to 10 years. These might include:

• Paying off your home loan sooner;
• Saving for your children’s education;
• Starting your own business.

Long term

Long-term financial goals usually take more than five years to reach, and for almost everyone the most important long-term goal is to save for retirement.

“Sadly, while the need to save for your retirement is uppermost in people’s minds, we consider retirement as something far away in the future and therefore often do not save enough. Only when we move closer to retirement, does it become ‘tangible’ – but the longer you leave it, the harder it is to save adequately,”  Koorts explains.

“The concept of retirement is changing and you can no longer approach it conventionally. As we tend to live longer, we will have to put away more and for a longer term if we want to make ends meet at retirement. Alternatively, you might have to work for longer and possibly postpone your retirement,” he concludes.

Ready to secure your financial future? Speak to a qualified financial planner to find the best options to suit you – request a meeting here. And remember: as a Sanlam Reality member, you can get up to 100% off primary asset management fees with Sanlam Investment’s flagship funds. Find out more, here.