PART 5 - Save for Fun Things using Savings Goals in the Personal Budget Software

Having the right tools can make all the difference when it comes to achieving your savings goals, no matter whether it's for your long-term wealth goals, like your emergency fund or home deposit, or it's for those fun reward things in life, like the next holiday, a new car, a celebration, etc.

Luckily, MoneyFormula makes planning and tracking savings goals as simple as setting the target amount you want to save.

For each goal you will instantly see what it will take and when you will achieve it and your goals are automatically updated each time the account balances change.

But, before we dive into the details of how to set up Savings Goals, let's have a quick look at the two types of goals available in the MoneyFormula app.

Within MoneyFormula, savings goals are listed under Other Accounts and in the screen below we can see they are split into Savings (Wealth Goals) and Savings (Rewards).

We have already covered an example of this type of goal in PART 3 - MoneyFormula Emergency Fund when we set up wealth goals to help Bob & Jill create their emergency fund, so refer back to the article if you need a refresher.

For example, this type of savings goal is good for nice things that are just over the horizon like a holiday, a new car or some other celebration or purchase you have planned.

You can also use this type of goal if you need to save a certain amount to meet a big upcoming bill or planned expense to make sure you have the money ready on time.

In the rest of this article we will go through an example of setting up a Rewards savings goal for Bob & Jill's camping holiday, that we first mentioned in PART 4 - MoneyFormula Budgets & Buckets.

The savings goals work by letting you set a target savings amount on one or more of your bank accounts.

We can see in the personal budget software screen below that currently Bob & Jill have no Rewards savings goals.

To help Bob & Jill save for their holiday, the first thing we are going to do is set up a bank account to track the money for the holiday fund.

From the account section in the personal budget software, under the All Assets, we select "+ Add" bank account.

For this example, Bob & Jill will call their account "holiday fund" and we will assume they already have a $100 starting balance.

Once we save the account we can see that it is included under our list of bank accounts, showing our starting balance.

Now that the account has been created, we can select "More >" to go into the account details.

To set up our savings goal all we do is select the "+ Add Target" option at the bottom of the account screen.

Bob & Jill want to save a total of $400, they have $173.33 a month in their budget for Rewards goals and they think they will get approximately 2.0% interest after taxes and fees.

Let's enter these figures into the screen.

As you enter the numbers in the top part of the savings target, the savings progress at the bottom is instantly updated to show you how much there is left to save, when it will happen and how long it will take.

So, in the example above we can see Bob & Jill need $300 more to complete their goal and it will take two more months of savings.

TIP - Because the results are updated in real-time, you can use this to play and adjust your numbers until you find a realistic savings goal. For example, if you want to find out how much you can save in 4 months, then keep adjusting the total required and monthly deposit amount until you come up with something realistic.

TIP - The Yearly Interest Rate is optional - In Australia all income is taxable and therefore depending on your personal marginal tax rates and where you put your savings you will need to adjust the interest rate to reflect how much you will get to keep (after tax, fees, etc.). As the rate is optional if this all sounds too complicated you can just leave it blank and plan based on your Monthly Deposit amount.

At the top of the screen you can see the account name changes to "Bank Account (+ Savings)" to show you this has a savings associated with it.

We can also see that the chart has been updated to show both the balance history and the future expected balances until we reach the savings target (you can switch either of these off using the buttons under the chart).

... and at the bottom we can see our Savings (Rewards) information which we can edit or remove at any time.

If we go back to our list of Other Accounts we can now see the Holiday Fund savings goal has automatically been listed.

In the personal budget software screen above, we can see the current balance of $100 and the target of $400.

If we select the savings goal and expand it, we can see the account the goal is linked to at the top and the savings details and savings progress at the bottom.

This information is automatically updated every time the account balance changes, so you always have the latest figures with how much you have left to save and the expect time remaining.

Both point to the same information, but it can be super handy when you have lots of bank accounts as it is easy to keep an eye on all of your savings in the one place.

For example, if you have 10 bank accounts and only 2 have savings targets then you can easily find your two savings goals under the Other Accounts, without having to wade through the 10 accounts.

Now that we have set up the savings goal, the next thing is to make sure we achieve it.

From the budget section in MoneyFormula, you can put specific amounts of your income against your Wealth Goals and your Rewards Savings.

In the case of Bob & Jill we can see below they have their $100 going towards their wealth goals and they have the $173.33 a month going to their rewards goals (which we set up in PART 4 - MoneyFormula Budgets & Buckets)

Setting up the money flows for your savings goals in your budget is a great way to make sure you prioritise paying money into them each month, giving yourself a better chance of achieving them, while at the same time letting you keep enough income available to cover your planned expenses.