Think about the goals that you have written down and how achieving each one reflects your values and changes your overall financial picture. Other goals, like saving for retirement, may need to be prioritized in order to take advantage of an employer match. Some goals, like an emergency fund, are time-sensitive. If you don’t have enough to fully fund each goal, you’ll have to prioritize. Now divide up your monthly savings between each goal using how much you have to save towards each goal. This will give you how much you need to save monthly to reach your goal. Divide the total savings you need by the number of months until you want to complete each goal. Using the goal completion dates you wrote down, determine how many months you have to reach each goals. Now you need to divide your savings between your goals. Identify how much you can comfortably eliminate and remember you don’t have to cut out discretionary expenses entirely.
This helps you stay on track and not feel so limited. It can be helpful to not allocate every spare dollar to savings and keep some “fun money” in your budget. What can you cut? How much you cut depends on how much you want to save and how hard you want to hit your goals. Identify things you spend on each month that aren’t necessary. This is where you will find money to save. Make sure to account for the bills you pay each month, your groceries, debt payments, and other expenses that you have to pay to get through the month. Determine how much money you need to meet your necessary expenses. Review your spending for the last several months. Now it’s time to figure out how much you can save each month. There is also a lot of evidence to support having a separate account for each goal. Always factor in when you’ll need the money and understand any taxes, fees, or penalties associated with the account you choose. Or you may have a retirement account that your employer maintains. For longer-term goals, you might consider savings vehicles that have a higher return, like investment accounts. It lets you earn higher interest but also gives you quick access to your cash with no penalties or fees.
For short-term goals where you will need the cash sooner or you want to have easier access to it, a high-yield savings account is a good choice. This can depend on the timeframe for your goals and also on your risk tolerance. Next, you need to pick your saving methods. Also, write down why you want to achieve each goal. This lets you distinguish between short-term goals, those you can reach in one to three years, and long-term goals which take more than three years. Get specific! Write down two or three savings goals you have. Define Your Goalsįirst, you must define your savings goals. This can help you be successful in saving in both the short and long-term. But how do you balance saving towards both your short-term and your long-term goals? I recommend creating a savings plan that takes your budget, goals, and timeframe into consideration. We all know it’s important to save money.