How to set and reach your savings goals

It feels good to know that your money situation is under control. Sure, you might not be a millionaire (yet). But you're working on some important savings goals and that alone is worth something.

After all, financial stability starts with goals. Even if they're small, every baby step you take can lead you to a brighter future.

Let's look at why saving goals matter and how to reach yours, little by little.

Savings goals matter—here's why

Why do savings goals matter? Because they could set you up for financial success.

Your savings goals can help you prioritize what's important. That can empower you to spend with more intention, pay down debt and create a financial safety net. The advantages of saving include:

• Less financial stress

• Less money going towards debt payments

• The ability to pay for emergencies or other expenses without borrowing

• More control over your life

• More peace of mind and happiness

Research on goal setting finds that specific, challenging goals tend to lead to better task performance than vague "do your best" intentions.

Setting specific goals is crucial because achieving financial well-being takes time. Saving money is usually a marathon, not a sprint, after all. Goals can give you a sense of achievement along the way and encourage you to keep going, even when fatigue sets in or you run into setbacks.

What is a savings goal?

A savings goal is a specific purpose you set money aside for regularly on a defined timetable. That's a general savings goal definition.

One way to categorize savings goals more precisely is by how long they take to reach. For example, you might have short-term savings goals, medium-term goals, and long-term savings goals.

It's OK to have multiple savings goals, and plenty of people do. The great thing about savings goals is that you get to define them based on where you are and where you want to go.

Types of savings goals

Some savings goals you can knock out quickly. Others might take years. It's easier to work towards your goals when you know how long you'll need to cross them off your list.

Short-term savings goals

Short-term savings goals, or other short-term financial goals, are goals you can complete in 12 months or less. Examples of short-term financial goals examples include:

• $1,000 for a starter emergency fund

• $500 for holiday gifts

• $500 for a weekend road trip with friends

• $750 to pay off a small credit card balance

Why set short-term goals for saving money?

If you've struggled to save in the past, seeing $500 or $1,000 build up in your bank account can energize you to push for even bigger goals. And by hitting those smaller goals first, you've developed some healthy money habits to help you save even more.

Medium-term savings goals

Medium-term savings goals are financial goals that are reachable in one to five years. Some medium-term savings goals may include:

• Pay off $10,000 in credit card debt

• Save $15,000 to buy a new-to-you car

• Set aside $25,000 for a down payment on a home

These are bigger goals, which means they'll require a little more work. But the end payoff is even more rewarding if you hit them.

Long-term savings goals

Long-term savings goals are financial milestones that take more than five years to reach. Examples of long-term savings goals include:

• $1 million for retirement

• $100,000 to pay for your child's college education

• $50,000 for a dream vacation with the entire extended family

Long-term savings accounts could help you fund some of these goals and maybe enjoy a few tax benefits along the way. For example, you might have a 401(k) retirement plan at work or contribute to a 529 college savings account for your kids.

If your workplace 401(k) offers matching contributions, putting in at least enough to get the full match can accelerate your retirement savings. Each plan sets its own match rules, and a vesting schedule might decide when the matched money becomes fully yours.

Other long-term savings options can include high-yield savings accounts and certificate of deposit (CD) accounts.

How to set realistic savings goals

To make goal-setting more effective, you might try the SMART method. SMART savings goals are clearly defined with a specific end date, so you know exactly what you're working toward.

SMART goals are:

• Specific

• Measurable

• Achievable

• Relevant

• Time-bound

Setting savings goals this way helps you avoid goals that are too vague, unrealistic, or otherwise don't fit your financial situation.

Here are some savings goals examples to show how the SMART method works.

It's pretty easy to see the difference. If you've set some goals already, ask yourself if they fit the SMART goal mold. And if they don't, consider how you can tweak them to make them more specific.

Strategies to help you reach your savings goals faster

Savings goals have a time component but maybe you want to speed things up a little. So how can you save toward your goals faster?

The best saving plan is one that's realistic, but aggressive enough to be meaningful. Here are some ideas for how to accelerate your goals.

• Discover one small, recurring expense ($5 to $50) in your personal budget that you could get rid of. Cut it and redirect that money to savings.

• Use found money to reach your goals. Get $50 as a birthday gift? Save it. Find $5 worth of loose change in the couch? That goes into savings, too. Every penny adds up.

• Be strategic about where you save. High-yield savings accounts could pay higher rates than a standard savings account, though rates vary and can change. Check out high-yield savings accounts and CDs at online banks to find out what kind of rates you could earn.

Common challenges and how to overcome them

You might create what looks like a foolproof savings plan on paper but find that it's harder to accomplish than you expected. Common barriers to saving can include:

• Not enough income to save after the bills are paid

• Unexpected expenses, like an emergency vet bill or car repair

• Lack of motivation

If you have roadblocks in your way, ask yourself how you can get around them.

Find more money

You can start with your budget to find items to cut. But if you've already trimmed all the fat you can, the next best option might be to boost your income.

For example, is it possible to generate more income with a side hustle or a part-time job? Or could you sell some things around the house you don't need? A job change (or a second job) is more drastic, but a higher income could make a difference in your ability to save.

Find inspiration

What if you're just not motivated to save? Try to envision how you'd like your life to be if you did have money in savings.

Make a vision board, either on paper or using an app. Be as detailed as possible.

A vision board can remind you, and motivate you, to stick with your plan. You could also try small treats or rewards when you reach a savings milestone. For example, you might give yourself a $10 treat budget for every $100 you save.

Tools and resources to help you save

Saving is easier when you have help, and there are plenty of tools you can use to reach your goals. Your personal savings plan toolbox might include:

• A budgeting app likeAchieve MoLO® helps you find money left over each month that you could save or apply toward debt

• Personal savings plan calculators could help you figure out how long it'll take you to hit your goals

• A debt reduction app could help you create a personalized payoff plan (try the Achieve GOOD™ app)

• Online resources can help you check in on your financial health. For example, take the Debt Fit quiz to learn how you compare to other Americans when it comes to taking care of your debt.

These are just a few financial plan ideas you might try to get a better handle on where your money goes.

The main thing to remember about saving is that consistency is what matters most. Even if you save just a little at a time, you'll eventually notice those efforts start to add up.

What's next

Here are some easy things you can do to get started:

• Brainstorm a list of savings goals you'd like to reach, including short, medium, and long-term goals. Then pick one goal from each category and see how you can make it SMART.

• If you don't use a budgeting app yet, download MoLO (it's free) to start tracking monthly expenses.

• Open a high-yield savings account and link it to your checking account. Set a small goal to transfer $5 or $10 to savings every payday to help you ease into the saving habit.