5 Key Ways to Learn How To Set Savings Goals
In the pursuit of building a business, savings often take a backseat.
That said, one of the most sustainable forms of investment can come from what is often referred to as “free cash.”
In tandem with your budget, your access to free cash can help formulate a plan to grow your business in a more sustainable and successful way.
Whether you already know or are just realizing it, you need to know how to start setting goals that are achievable in the long run.
Most start, need money, and then the well dries up – let’s talk about how you can start with savings goals that truly last the test of time!
How Free Cash Can Power Your Business
One of the best things about savings is that they come with no strings attached.
As opposed to relying on your credit card, a loan from a bank, or an investor, your savings are entirely yours – you can invest in your business using them, without worry.
That’s why having strong savings principles is so important. If you don’t know how to go about setting those goals, changes are your money will never build up enough to use it properly.
Rather than using your savings to simply get by, let’s break down some of the things you can do to set savings goals and really stick to them.
Savings Goals for Long-Term Success
The opportunity to save only reveals itself when you have an in-depth understanding of your finances and what you should do with them.
If you consider your savings/free cash as cash reserve (a 2-3 multiple of your monthly operating costs) you have key opportunities to do more with it. This could include:
- Asset acquisitions
- Key strategic investments to expand market reach
- Employee profit sharing plans
But, how do you reach these goals? First you need to manage currency risk, and following that you need to be able to embrace the methods which result in larger cash reserves.
This includes knowing when money is coming in, when it’s going out, and what’s left that you can put away for future investments.
Once you have a solid understanding of your budget, your revenue, and where your savings are going to come from, you can start developing good habits.
These are the five basic strategies to help you set goals for long-term success.
Identify & Diversify Your Goals
The first, and likely most important, thing you can do is define why you are saving money in the first place.
If you have a clear, actionable reason to save, it will often act as motivation to help reach that goal.
Not only does it give you a clear deliverable to work towards, but it allows you to set up benchmarks that you can reach to ensure that you are getting there at the right trajectory.
Simply saving for a rainy day isn’t enough when it comes to your business – you need to know why, and for what, you’re saving.
It doesn’t mean that you can only have one goal, though. Diversifying your goals can be a powerful tool, so long as you know how to prioritize.
If you have multiple goals that you want to reach, attaining the smaller ones first can showcase the power of saving and inspire you to go even further.
Earmark Your Funds
While it is a great start, often it’s not simply enough to identify why you’re saving in the first place.
Having a goal is good, but now you need to determine how much you intend on saving (and for how long).
Your goals need to be manageable so that you can meet them on a monthly basis (without having to scrape by to do so).
Relying on hard data, rather than coming up with a random number, can help you set aside the liquid cash in your budget to accelerate your savings.
Make It Automatic
Ultimately, crafting a comprehensive timeline to understand when you’ll reach your goal is a great idea – but you still need to make your payments.
When done right, automatic payments can be a boon for your business – rather than a nasty surprise.
Again, this all comes down to knowing how much you should save and being able to sustainably take that money out each and every month.
If you have a solid picture of your budget, moving that money out of your account automatically shouldn’t be difficult at all.
In fact, automatic payments can help you put together the structure you need to set savings goals that can truly be achieved.
Leave It Alone
One of the best ways to learn how to set savings goals is that you should pay less and less attention to it.
This is especially true if the timelines are fairly far out – try not to pay too much attention to how much is adding up, as it more become tempting to use it.
The best way to reach your savings goals is to let it become second nature, without harming your business, and pretend like it isn’t even happening at all.
Setting strong savings goals is more about setting it and forgetting it.
Use The Proper Tools
Saving effectively isn’t magic, it relies on solid fundamentals and having a thorough understanding of your budget.
You could even think of your savings as a continued investment in the future success of your business.
When done right, and with a rigorous understanding of your budget, you can learn how much is sustainable and how much your business can handle putting away every month.
If you rely on applications you trust and can use them to perform a deep dive into your finances, you can set savings goals that are not only aspirational – but achievable.
Set More Savings Goals with BOARD
BOARD is a tool designed with your budget in mind.
We can help businesses gain an understanding of where your money is coming in, where it is leaving, and where you have room for improvement. That includes your savings.
Once you have an idea of what you want to save, and after you learn how to set savings goals, you can start to put that money to work for you and the future of your business.
Interested in getting started? Start your own free trial today!