The high cost of living, unexpected expenses and spur-of-the-moment spending can, all too easily, derail our plans.

One of the most effective ways to stick with your savings targets is to set some structure around when, and how much, to save.

The 50-30-20 guide

Splitting your post-tax monthly income using the “50-30-20” guide is one well-known strategy that may work for you.

Under this approach, your income is distributed like this:

• 50% for needs: Essential living expenses you can’t skip, such as your mortgage or rent, car loan, credit card repayments and any other debts, utilities and groceries
• 30% for wants: Spending on “luxuries” such as new clothes, dining out and entertainment
• 20% for savings: Money that goes into your savings account.

Is the 20% savings target achieveable?

Achieving the “20” part of the 50-30-20 guide takes discipline and will depend on your circumstances. Accordingly, you may need to adjust these figures to suit you. If, for example, you have a big mortgage then a 60-20-20 split may be more feasible.

And if you’re juggling a few different debts, you may need to dedicate more of your 20% 'savings pool' to those repayments until they’re gone or significantly reduced.   

Know your income and expenses

The first step to turning 20% of your salary into regular savings is to understand your income and expenses.

Look at your sources of income – broken down by weekly, fortnightly, monthly – then list down all your expenses, in detail, to get a fuller picture of where your money is going.

Don’t fudge these numbers or forget to adjust annual costs like insurance. At the end of the day, you’re the one who’ll lose out if you do.

Decide on a savings goal

Before setting your budget, work out what you’re actually saving for. Decide what’s important to you, what you want to achieve and how it’s going to make a difference to your life.

Answering these questions can help keep your goals front of mind, especially when one of those spur-of-the-moment purchase decisions crops up.

Set a realistic budget

Once you’ve got a good idea of your income and expenses and decided on a goal, the next step is to take a look at your budget.

Setting an impressive budget is great, but if it’s unrealistic and you fail to meet it this can be demotivating, especially if it’s limiting your lifestyle and causing you stress in the process. There’s also a risk that your savings goal falls apart and you give up.

So your budget needs to be something you can achieve, not just for the first few days, but week after week, month after month.

Quarantine your savings

Being able to access your cash too easily can derail your savings goals. Separating money for bills from discretionary spending and savings – then capping it – may curb the temptation to overspend.

If you set up a savings goal in NetBank you can automatically separate savings from your day-to-day spending. You can then follow the progress, set up scheduled transfers into your savings account and top up your goal whenever you have some extra cash.

Review your budget

It’s a fact of life that things change. So at some point along your savings journey, you goals may need tweaking.

If you feel your goal is becoming too much of a stretch, reign it back for a while. You can always increase your budget later once you’re more comfortable.

There’s no hard-and-fast rule for how frequently you should review your budget. Looking at it quarterly can be a good place to start.

Once you’ve tracked your income and expenses for a full year, you should have a clear picture of your spending. You may then decide to review your budget annually.

Open a CommBank GoalSaver account and start earning bonus interest today