Saving for life goals

Work out what your goal is.

• What do you want? What’s it going to cost? When do you want it by?

For example: I want to buy a house, for £350,000, in 4 years.

If you’ve got one financial goal this is straightforward. If you’ve got several then you will need to classify them into:

• Short-term goals (1-3 years)
• Medium-term goals (3-10 years)
• Long-term goals (10+ years)

List each of your goals with a target date and an estimated cost.

Prioritise your goals by dividing them into the following categories:

• Needs: paying off debt, having an emergency fund
• Wants: Travel, hobbies, luxury purchases
• Investing in your future: Pensions, savings and investments, buying a house

This will help you establish which goals to approach first.

Set your budget. This can be done one of two ways:

• Use a budgeting app (this is quick and simple)
• Use the 50/30/20 budgeting rule (50% of your income needs, 30% wants, 20% savings or debt repayment)

Open the right type of account for your goals. The rule of thumb is as follows:

• Goals of less than 5 years – open a high interest savings account or cash ISA
• Goals of more than 5 years – open an investment account or stocks and shares ISA

For our guide to the best stocks and shares ISAs, click here.

If you want to know more about the benefits of a stocks and shares ISA, and how they work, read our guide.

Stay flexible and adjust your goals as your circumstances change. You may find it is possible to increase your monthly savings, or you may need to pause.

Consistency is the key here. Make sure your monthly savings are automatically transferred to your savings or investment account each month.

Anything we haven’t covered? Get in contact and let us know.