Do you feel like you’ve been pushing off your next vacation for way too long? Are you not investing as much as you’d like because you’re focused on paying off debt? This is a struggle that many people face, and one which I have decided to tackle.

There are certain goals that I would like to achieve this year and certain activities I would like to do. The trouble is that I always say I will save up for them but, for some reason, I can never find the money to put away! The solution lies in automatic savings. The reason I don’t seem to save is because I always find ways to spend the money in my chequing account. Whether it be $60 at the bar, $20 eating out, or $50 for a new gadget, I always seem to find ways to spend. The secret is to make sure the money isn’t there for you to spend in the first place, and here is how I’m doing it:

I have four clear goals at the moment:

• Go on a ski trip to Whistler in February (if I can get the time off work)
• Go on a surfing trip to Costa Rica in April
• Get my motorcycle license and save up for a motorcycle trip down the Western USA in June
• Start investing in mutual funds (index and other long-term growth funds are appealing right now)

Each of these goals costs money, and unless I set up an automated budgetting system, I could quickly get overwhelmed with the details of saving: when do I contribute, which goal do I contribute to, how much do I save each week, etc. These are the details that bog people down and end up keeping them from achieving their goals–whether it be a Caribbean vacation or a new car. So, what is my automatic system? Here is how I’m doing it:

Step 1: Create an account for each goal

Prior to today, I had two bank accounts: 1) my regular chequing account where all my income initially goes and 2) an ultimate savings account (2.75%) where I occasionally deposited savings. Now I have five accounts, one chequing and four savings (one for each of my goals). I have actually re-named each of my savings accounts according to my goals: “Ski Trip,” “Costa Rica,” “Motorcycle Course and Trip,” and “Investments.”

Step 2: Set a timeline for your goals

Decide when you want to carry out your goals. Above, I have listed which month I plan to do each of my goals. This allows you to move on to step 3.

Step 3: Calculate your necessary weekly savings

Now that you know when you want to achieve your goal, figure out how much money you will need to save each week. For example, I know that a ski trip to Whistler will cost me approximately $800. If I want to leave on February 13, I have six weeks to save enough money. Divide $800 by 6 weeks, and I know I have to save about $135/week.

Step 4: Set-up automatic transfers from your chequing account

Now that I know how much I need to save each week, I simply have to setup an automatic transfer from my chequing account to my “Ski Trip” savings account. The transfer will happen every Friday (the day after I receive my automatic deposit from work) and will occur weekly for the next six weeks, at which point it will automatically stop.

I then repeat this process for each of my accounts/goals. All of these steps can easily be done with online banking, or you can also call your bank and have them set it up for you.

I realize that my goals are a little unrealistic for most as I am still living at home and don’t have any children/major financial commitments, but the great thing about this method is that it can be adjusted to fit anyone’s goals on any budget. Even if you just want to buy a computer in six months, you can figure out the cost and how much you need to save each week. It requires some planning, however, it sure beats buying on credit and paying large amounts of interest.

This method is a great way to put your goals into action. It is very easy to say “I want to go on vacation this summer.” Unfortunately, it is also very easy to watch the months go by and then realize you didn’t actually save anything for the trip. Hopefully these steps can help you realize your goals. Faster.

Extra Note:

“But I’m in debt; how could I possibly start saving!”

One of the recurring themes in the financial books (The Wealthy Barber, Automatic Millionaire) and blogs (Get Rich Slowly, All Financial Matters) I’ve read is that automatic contribution to savings are essential for financial success. If you’re in debt now, it is likely because you have a habit of living beyond your means (don’t get depressed, most people do!). If this is the case, the chances that you’ll be debt-free and able to start saving money five years from now is not very likely (although it may be possible). The moral of the message: putting off savings until you get out of debt is not always the best idea. Even if you are in debt, you should be putting away weekly amounts into savings/investments. Even small amounts will build up over time and collect compounding interest. Many argue that this is essential to a secure financial future.