Setting up a savings plan

Starting your journey towards financial success begins with a well-designed savings plan. Regardless of your life stage or whether your financial goals are long-term or short-term, you’ll achieve them faster if you stick to a sustainable and strategic savings plan.

Here are 10 steps to help set up a savings plan and work towards your financial goals, whatever they are.

1. Design your own personal savings plan

Taking the time upfront to design your personal savings plan is a good place to start. Your plan should be as unique as you are. Someone else’s plan isn’t going to work for you.

The act of planning itself can help deliver a sense of achievement and set the stage for disciplined financial habits. Consider this plan to be your personalised roadmap that outlines your financial goals as well as the route to attain them.

2. Determine your goals

The foundation of any savings plan lies in clearly defined goals. What are you saving for? What would you like to achieve? Take off on a world trip or buy your dream car? Maybe you want to get a headstart on your children’s education? Finding inspiration for the future can be a powerful motivator.

Articulate your aspirations by writing them down. Once you have them defined, you can divide them into long-term goals and short-term goals, and start prioritising what you’d like to save towards first. It’s a good idea to start with something smaller and easier – that way you’ll be more likely to see the results and reach your first savings goal sooner!

3. Establish real targets for your savings plan

Set a tangible savings target by putting some actual figures and dates next to your goals. Establish some easy-win and longer-term goals, remembering to give yourself enough time to save for them. This makes your goals more manageable and provides a sense of accomplishment as you reach each milestone.

4. Calculate how much your goals will cost

Once you know how much you’ll need to save and when you need to save it by, the next step is calculating a regular savings plan by determining the dollar amount you’ll need to save on a weekly or monthly basis.

Realistic savings targets and timelines ensure your aspirations are grounded in practicality.

5. Get your budget in order and regularly review it

Now you’ve got your goals and savings plan, it’s time to get your budget in order. You can track your income and expenses to identify areas where you may cut back or prioritise spending, to help you set a workable budget.

If you bank with Westpac, the mobile app has a range of tools to help with budgeting. A simple dashboard gives an overview of your incomings and outgoings, with the ability to set your own category types to see where your money is going.

The Westpac budget planner is a free online calculator that can help with running the sums on your income and expenses to let you know how much money you’ve got left over once all your expenses are covered.

Whether you use a budgeting tool, a calculator, or a pen and paper, don’t forget to regularly review your budget. This will allow you to stay on top of your financial situation and make more informed decisions.

6. Identify how you could save money instantly

Setting up a budget isn’t just about looking at the money that goes in and out, it’s also an opportunity to review how you’re spending money.

Can you reduce spending to create instant savings? Evaluate your discretionary expenses and identify areas where you can trim without sacrificing your quality of life.

Some expenses may be fixed such as your rent or mortgage, but chances are you'll find different areas to cut back. You might be surprised by how much you spend on entertainment and eating out, so this may be an area where you're able to spend less and put more into savings. Redirect these savings toward your financial goals for a quick and impactful boost!

7. How much can you regularly save?

Work out how much you can regularly save based on your budget and financial goals. Establish a realistic and consistent savings amount that aligns with your income and expenses, and take into account variable expenses as well as annual bills.

Consistency is key, and even small, regular contributions can accumulate over time to make a significant impact.

8. Estimate how long will it take to achieve your goals

Figure out how long it’s likely to take to achieve your goals based on your savings targets. Having a timeframe provides a sense of urgency and helps you stay focused on the end goal.

Take note that paying off debt might increase the time it takes to reach your savings goals. For example, paying off your credit card might be a priority for you. If you have a lot of outstanding debt, it might be just as rewarding – if not more – to see the total reduced over time as it is to see your savings grow. Once you’ve paid off outstanding debt, that’s money you can then put into savings.

No matter what your approach is, be flexible enough to adjust your timeline if needed, but it’s also important to maintain accountability throughout the process to help you reach your goals.

9. Set up your savings accounts and automate transfers

Transaction accounts are great for everyday spending and money management, but you may reach your goals faster with the help of a dedicated savings account that offers bonus interest.

The Westpac Life savings account, for example, you could earn bonus interest each month you grow your balance. There’s also the ability to set up to six different savings goals in just one account.

If you prefer unlimited access and no minimum deposits or monthly balance, Westpac’s eSaver online savings account offers a bonus introductory interest rate for new customers and a competitive interest rate on savings.

Whichever savings account you choose, it’s important to automate direct transfers from your main transaction account to this account. Automation ensures you pay yourself first, and removes the temptation to divert those funds elsewhere.

You can also grow your savings with a fixed interest term deposit, particularly if your goals are geared towards long-term savings. Term deposits mean you won’t have access to your money during the fixed term, but you will know exactly how much your return will be after the set period (you can choose a term from one month to five years).

10. Make a date with yourself to regularly review your savings plan

Life is dynamic and circumstances change. Regularly reviewing your savings plan allows you to adapt your plan to evolving goals, income shifts, or unexpected expenses.

If you end up with more cash to spare, you could reach your goal faster by making higher contributions, or you could even set up a second savings plan for another goal.

Make a regular date – no less than monthly – with yourself to check in on your savings, track progress, and factor in necessary adjustments to stay on track.