Discover simple means to realise your first big goal – be it a trip, bike, or MBA – using SIPs and budget-tracking apps.
Everyone has different financial goals. However, we all begin somewhere. Whether it is saving for a vacation, buying your first bike, or pursuing an MBA, these goals require financial planning. Regardless of your goal, one thing remains the same that’s turning this goal into reality. Wondering how to do this? The answer is quite simple – save and invest. Doing this helps manifest your goal without falling into debt.
In this article, you will be introduced to simple tips you can use to save for your first big goal using SIPs and budget-tracking apps.
Tips to save for your first big goal
Start by defining your goal
The first thing you need to do is clearly define your financial goal. Whether it is buying a new bike, going on a vacation, or pursuing an MBA, each involves different costs. Take time to estimate the overall cost of turning your dream into reality.
If your goal is more than a year away, factor in inflation. For example, if an MBA costs Rs. 10 lakhs today, it might cost Rs. 11.5 to Rs.12 lakhs in three years assuming an annual inflation rate of 5–7%. This ensures your savings target is realistic and future-proof.
Once you’re aware of your goal, set a timeline. A clear goal would be: “I need to save Rs. 2 lakhs within two years to buy a new bike.”
Break into monthly targets
Once you know your goal amount and timeline, break it into monthly targets. This makes the goal manageable and trackable. By setting monthly milestones, it becomes easier to realise your goal. Also, doing this requires understanding how much you must save monthly to achieve your goal within a given timeframe. For instance, to save Rs. 2 lakhs in two years, you must save around Rs. 8,400 per month.
Budget wisely
Establishing a budget is needed to avoid overspending and living outside your means. For instance, if you earn Rs. 50,000 monthly, use the 50/30/20 rule: allocate 50% for your needs, 30% for wants, and 20% for savings. This ensures you can live comfortably and enjoy your life by simply cutting out the excess.
Use the right tools
When it comes to achieving your financial goals, it’s important to save. However, if you want to grow your money, then investing is needed. By using the right tools, it becomes easier to achieve your goals. The two most important tools you can use are:
- Budget tracking apps
A budget tracking app helps keep track of every rupee spent. It helps categorise your expenses and identify any spending leaks. It encourages financial discipline needed to avoid overspending or debt.
- Systematic Investment Plan (SIP)
SIP allows you to invest a fixed amount regularly in mutual funds of your choice. Depending on the investment horizon, expected returns, and your risk tolerance, choose one to meet your needs. For instance, equity mutual funds offer a higher growth potential but require a longer investment horizon, while debt mutual funds are low-risk and better suited for short-term goals. SIPs generate higher returns than traditional savings options such as recurring deposits or fixed deposits. This is due to the power of compounding, which helps your money grow by reinvesting the returns generated.
For instance, saving Rs. 2,000/month in a recurring deposit at 6.7% gives Rs. 51,475 in two years. Investing the same in a SIP at 10% gives Rs. 53,090 in two years and Rs. 83,680 in three years.
With inflation at 6%, the real value of your savings in a recurring deposit may be lower than expected. SIPs help beat inflation and preserve purchasing power.
Automation is needed
By setting auto-debits for your SIP, a fixed amount will be debited every month. Enabling alerts on the budgeting app helps you consciously stick to your budget. Both these create an effective and disciplined savings system that allows you to stick to your plan without any extra effort. Once you build momentum, sticking to your plan and avoiding temptations becomes easier.
Reflect and review
Review your budget monthly to ensure it is effective. If you notice there’s more scope for saving and investing, readjust accordingly to accelerate the process of achieving your financial goals. Once you develop the habit of budgeting, saving, and investing, stick to it even after achieving your goals.
Key takeaways
- Define your goal and timeline, factoring in inflation to set realistic targets.
- Automate savings using SIPs and budgeting apps for consistency.
- Monitor expenses to avoid overspending and stay on track.
- Take small, consistent steps—discipline matters more than size.
Achieving your first big financial goal doesn’t involve extreme sacrifices. Instead, it is about using the right tools that help you save and invest wisely. A budget tracking app will help you stick to a pre-defined budget to prevent overspending while maintaining a SIP, which will help grow your money. Even if your new bike, dream trip, or MBA seems far off right now, it’s not.
Before investing, consider your risk tolerance and investment objectives. By investing in mutual funds through FundsGenie by Geojit, you can transform your first big goal into reality. Remember, start small but stay steady.