BUSINESS NEWS - Andile Jonas, Head of Marketing at Momentum Savings, points out that research confirms that goal-based saving is more motivating and sustainable than saving “just in case”.

I sometimes compare tackling finances with revamping a house. Where does one start? It’s so overwhelming. And then, as with all tasks, if you break them down, they seem more achievable.

Many financial websites will try to convince you to set SMART savings goals: Specific, measurable, achievable, realistic and time-based. But why?

Findings of researchers at Peking University suggest that to improve retirement readiness more focus should be put on stimulating and enabling individuals to set concrete savings goals for retirement. They published an article, “Savings goals matter”, in the Journal of Behavioral and Experimental Finance in June 2025.

They insist that setting concrete goals has been shown to be key for successful financial planning and pursuing goals.

In fact, they say if you plan and set goals, you will accumulate more wealth, and back up their claim with rows of statistics.

Another set or researchers, from the Kansas State University, confirm their findings: Individuals who set specific savings rules or goals tend to save more over time. They published their research on goal setting in the International Journal of Financial Studies on 20 March 2025.

Kansas says this is because individuals are more likely to save when goals are clearly defined and broken into manageable time frames. They add that self-control and financial planning strategies also play a role in shaping saving habits. If you have savings goals, you are less inclined to splurge your money or to be tempted to overspend.

They seem to think that people who set savings goals will enjoy “a smooth consumption path”, meaning that they balance present needs with future aspirations better.

When people know that a major expense like a medical procedure is waiting, they are also more liable to save, but not significantly so. A number example is that low-income households who are expecting major expenses within the next 5 to 10 years are 1,2 times more likely to save.

The researchers deduct that simply setting a savings goal can create conditions for better saving habits without the need for a specific expense or reason. That is why they suggest that households with clearly defined savings goals “tend to exhibit stronger saving habits, particularly when those goals are framed as specific financial targets”. They even suggest that “savings goals” is shorthand for “self-control”.

They also focus on the importance of financial advice, and that financial advisers should work with their clients to identify and articulate goals: for retirement, for buying a home or for building an educational fund. They believe that will encourage disciplined and goal-oriented saving behaviour.

It seems that such clarity and direction steer investors clear from drowning in day-to-day budget decisions. It helps you to focus on what matters to you, and how to get there as soon as you can.

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