Do you have a dream that you want to achieve, but don’t know how to save money for it? Maybe you want to buy a new car, go on a vacation, or put a down payment on a house. Whatever your dream is, you need a plan to make it happen.

Saving money can be challenging, especially if you have a lot of expenses and temptations to spend. But it doesn’t have to be impossible. In fact, there is a simple formula for saving money that anyone can follow: Envision what you are saving for, make a plan, and then execute that plan.

Sounds easy, right? Well, it can be, if you follow these steps:

Step 1: Choose your dream and set your savings goal

The first step is to be clear about what you are saving for and why. Having a specific and meaningful goal will motivate you to save more and spend less. If you have more than one goal, prioritize them and make a list. You can save for multiple goals at the same time, but have separate accounts and timelines for each.

Step 2: Calculate how much you need (and are willing) to save

The next step is to figure out how much money you need to save for your goal, and how long it will take you to save it. To do this, you need to create a savings budget. Start by tracking your income and expenses for a month or two, and categorize them into needs and wants. Needs are things like food, rent, transportation, and utilities. Wants are things like dining out, entertainment, hobbies, and travel.

To free up money to save, you need to cut back on some of your wants and funnel that money into your savings. You don’t need to give up all your wants, but decide which ones you can live without or reduce. You may also need to make some trade-offs, such as taking public transportation instead of driving, or cooking at home instead of eating out.

Step 3: Pick your strategies

Once you have a savings budget, you need to choose some strategies to help you save more effectively. Here are some examples:

• Send automatic deposits from your paycheck into a savings or investment account. This is one of the easiest and most effective ways to save, as it saves time and removes the temptation to spend.
• Follow a balanced money formula, such as 50-30-20. This formula recommends spending no more than 50% on needs, 30% on wants, and saving the remaining 20%. If your needs or wants take up too much of your income, you should consider cutting them.

• Use the 24-hour rule. Instead of making impulse purchases, wait 24 hours before you buy any big-ticket items so that you can reflect on the purchase.
• Save your windfalls. If you receive a bonus, a gift, a tax refund, or a small inheritance, save it instead of spending it.
• Ramp up your savings rate. For a long-term savings goal, you could commit to increasing your savings rate by 1% each year. For example, if you earn $50,000 a year and save 10% of your income in year one, increase that by 1% or $500 in year two, and so on. This way, you will save more money over time without feeling a big impact on your lifestyle.

Step 4: Stay focused

The biggest challenge with saving money is sticking with it. There will always be temptations to spend money or give up on your goal. Here are some ways to stay focused:

• Remember your “why”. Why are you saving for this goal? What will it mean to you when you achieve it? Keep a photo or a reminder of your goal somewhere you can see it often, such as your phone, your wallet, or your fridge.

• Break it down. Large goals, such as a $25,000 down payment for a house, might seem daunting. Encourage yourself by celebrating your progress with smaller milestones, such as every $5,000 you save.
• Visualize your progress. Make a chart or a graph of your savings, and update it as you move closer to your goal. Seeing your savings grow will motivate you to keep going.

Step 5: Re-evaluate your dream before you buy

Once you’ve reached your savings goal, it’s a great time to re-evaluate your initial dream. Have your goals or priorities changed at all since you started saving? Has the cost of the item you’re saving for changed? Before you spend the money that you’ve saved, think about whether you still want to make the purchase, or if you have a better use for it.

With this simple approach, you can achieve your dreams and enjoy the fruits of your discipline, planning, focus, and effort. Happy saving!