How to save money and afford the things you want

Find out how to realistically save for the things your truly want.

Disclosure: This article is not intended to be financial advice and information should be taken as educational only. Read the disclaimer.

Forget borrowing money, dreaming of “one day”. I want to show you how to save money for the things you truly want.

If you're reading this article, you've probably read a few others about saving money.

Most read something like this:

  • If you’re not saving, you should be.
  • If you are saving, you’re not saving enough.
  • Stop spending so much money on the things that make you happy and save so you can buy the things that make you happy later in life.

It’s easy for me to sit back and tell you what you aren’t doing, or what you are doing is wrong – but I will dive deeper. There is a method for saving that I use that's helped me afford what I didn’t always think was affordable.

It starts with a bit of planning and ends with you living the life you want to, while avoiding debt or credit.

Like spending, it takes a bit of thinking to get your savings plan ready to go.

If you need help saving for expenses you HAVE to cover, read through the article on spending as that will introduce you to a way you can allocate money to expenses before you need it.

I hope you can find the enjoys constant saving the same way our family does. It is a core part of our financial habits now and has put us in a place where we have money available for the things that make us happy and free.

Find a reason to save money

Many people struggle to save because there is nothing forcing them to do so. Why save for later when you can buy something now?

Some people struggle so much they appreciate their mortgage. When you buy a house, it forces you to pay off the debt which in a way is forcing them to save to pay off the asset.

Other debt like from credit cards is a dangerous thing. We can get carried away buying things with money we don’t have.

It takes discipline to save money for something, but we should be able to see the end goal and have a reason above all that drives us to do so.

You might already have something in the back of your mind that you’d like to have the money for.

A simple exercise to work out what you truly want is to work out what you’d spend say $500,000 dollars on if it were in your savings account.

A new car, holiday, renovations, new tech?

Have a dream and see what you can come up with.

You might have two things, maybe 25.

Once you come up with a list, highlight the few that you honestly think are goals that you want in your life. Things that will improve you as a person or family.

These will be the reason for you to save, the things that keep you going about it. We’ll now turn these dreams into reality and work out how we make them a reality.

Work out what you need to save regularly

Have a decent list of reasons to save money? Great.

Let’s plan out when and how we’ll hit them.

To turn them into financial goals, you must find two numbers that you can determine: how much they will cost and when you will ideally like to have them.

Be as specific as possible.Here’s an example

  • New car – $15,000 – Dec 2021
  • Holiday to Japan – $5,000 – Oct 2022
  • Wedding – $15,000 – next 7-10 years
  • House deposit – $100,000 – 2026

Doing some fast maths you can then work out what you need each month to save money for each of these (based on my timelines at the date of writing).

  • Car – 15 000 / 18 months = 20 000/18 = $833
  • Holiday – 5000 / 24 months = $208
  • Wedding 15000 / 84 months = $178
  • House Deposit 100000 / 72 = $1388
  • Total = $2607 in savings a month

So now we know if we want to hit all out goals at the time we’re aiming for we need to be saving over 2k a month.

Use the same maths for your savings numbers. How does your monthly savings target look? Achievable, unrealistic?

You can simplify or reduce your targets by focussing on one or two savings goals at a time. In my example, I have a mix of shorter term goals (holiday and car) mixed with longer term ones (house and wedding) which can easily scale up or down.

In my example, if I focused on the shorter term goals, I would only need $1041 a month.

Or you could reduce the amount you aim to save – like a $10k car instead of $15k one (reduces the above to $555 a month).

Tune up and down your dates and costs. Find a balance that you feel is realistic and motivating. Add this number to your regular expenses as a ‘cost’ that you should can cover regularly.

How much should I be saving?

Now you have a few numbers in a place that set you up for savings goals, it's important to see how these match up with your savings rate.

This is is the percentage of your income that you save. Knowing this will give you an understanding of how much of your income you dedicate your saving and how much you can afford to save money.

Workout your savings rate

To work it out, use this simple equation.

Your income – your expenses / your income x 100 = ?

Eg. 6000 – 4000 / 6000 x 100 = 33.33 or 33%

So in this example 33% is the savings rate. With your own numbers it might be 20%, 40% or 5% (maybe 0).

Whatever it is, you can change it.  Knowing this now, you have a real grasp of what you are allocated to saving regularly. This is way more powerful than a dollar figure as it proportions your savings against expenses. Knowing you save 40% of your income gives you a much simpler way to see if you are saving well compared to thinking of a dollar number.

You can now add up your savings goals and see if they are above or below your savings rate.

For example, if we needed to save 500 a month on an income of 2000 we would need to be at a savings rate of 25% or more. Here is gets really, er, real.

You can see if your savings rates will facilitate your goals.

Increase your savings rate

You may need to find ways to to increase your savings rate (increase income or reduce expenses) or reduce savings goals to align your regular savings with the goals.

The beauty is, if your income changes then so does your savings potential. If you earn more, then your savings should increase to at least keep your current percentage the save (or more!) and if you have a drop in income, you can do the reverse.

Whatever your number is, start challenging yourself to improve it. You might be able to a percent each couple of months so that a 20% savings rate at the start of year ends up being 26% at the end. Earning $4000 a month, you’d go from $800 a month in savings to $1040 if your costs don’t change.

Find a place to put your savings

We can talk in depth about savings account types, investments, apps, stocks or tools that are optimised to the max, but we only need to keep it simple.

The best way to position your savings is

  • In a place hard to get (need time or effort to access it)
  • In an account for each goal (not all together in one place)

In reality, I suggest setting up online only savings accounts. These would be separate to your everyday transaction accounts, or ones that you used to pay for things via card or online. If you use an entirely different bank, then you need effort to send money back and forward, enough of a barrier that makes it annoying enough to think twice.

For each savings goal you have (holiday, wedding, retirement) you can set up an individual account. This way you see what you have and how you have to go. Name them accordingly so that if you are tempted to pull money out of them, you are affecting your future self.

A large pool of savings is easy to tap out of, but pulling coin from your ‘Holiday to Bali’ account paints a picture of what you are draining from.

If you are already saving and have money in accounts ready to gain higher returns than bank interest, then there are plenty of ways to invest this money. Shares, robo, managed and index funds come to mind.

Stick to the plan

Now comes the hard part, which is simple to comprehend but challenging to adhere to.

It’s about staying strong and dedicating yourself to saving regularly so you can reach your goals

There will be distractions, new goals, unforeseen events and changes to your life. Your income might go up or down and affect your savings rate (these shouldn’t stop you saving even if it's as low as 1% or 2%).

You will look at your savings accounts and see a lot of money in there. It will be tempting to spend.

People will talk to you about awesome things they are spending money on and you will want that.

I tell you what though, there is nothing as exciting as hitting a financial goal. To have the money you need and want available to spend on something that can improve your lifestyle, relationships, freedom or convenience.

3 tips to save money

Save money, live better

If you want to truly live a rich life, you need savings. Rich people save for things BEFORE they need them.

Saving money aligns closely with your spending. While we might look at saving as what's leftover after it covers all your expenses, meaning it might be hard to do it consistently, it's worth considering saving as its own spending category.

Start today. Find your reason to save, work out how much time and money it’ll cost, then focus on getting those new accounts filled. It’ll take time, but it will be worth.

There are few greater senses of freedom than having all the money you need to buy the things you want.

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Tim Ellis, creator of, helps people confidently invest and manage their money. Inspired by his own experiences, Tim is passionate about creating a financially secure future for his family and sharing his personal finance knowledge with others.

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