There are so many things to save for in life, but it can be overwhelming trying to figure out where to start. Whether you’re saving for retirement or your first home, you should always find a way to prioritize your finances and work on meeting those goals. Here’s some information about the best savings goals to aim for!
Retirement
Retiring someday is the whole point of paying your taxes and setting aside money for retirement.
The sooner you start contributing to your retirement, the better prepared you’ll be when the time comes. The earlier you start, the more time your money will have to grow. Even putting in modest sums over a long period of time can add up and produce great results in just a few decades. What’s more, employers with matching contributions offer employees an instant 100% return on their investments! The compounding effects of contributing early can be priceless when it’s time to retire.
Emergency fund
An emergency fund is an important savings goal to have in case of unexpected expenses. Unexpected expenses can come from any number of things, like a car accident, job loss, or medical emergency. If you don’t have money saved up to cover those unexpected expenses, you’ll likely have to resort to credit cards or loans, which can end up costing you a lot of money in the long run.
That’s why it’s important to save up for an emergency fund. Ideally, your emergency fund should contain enough money to cover 3-6 months’ worth of living expenses. That way, you’ll be able to handle any unexpected expenses that come your way without having to resort to high-interest debt.
Build a home
Saving up to build a home of your own is a great goal to have. Not only does it provide you with a place to call your own, but it can also be a great investment. In fact, over time, home values have consistently increased, making owning a home one of the best ways to save for retirement.
Obviously, building a home is no cheap process. You need money for the land, for general contractors, and for any features and amenities, you may want in your home. However, the highest initial costs of building a home can be mitigated if you already have enough money saved up for a 20% down payment. That way, you won’t need to take out a mortgage and pay interest on it over time – which is another reason why starting your savings early is important!
First car
Even millennials with access to ride-sharing apps like Uber and Lyft often find themselves in need of their own set of wheels. Owning your own car opens up opportunities for employment and provides you with more independence overall. It’s also something that will likely wear out at some point, so having cash saved up for repairs or replacements is always ideal.
First cars aren’t cheap either: most new cars cost at least a few thousand dollars, and used cars can cost even more. That’s why it’s important to start saving for your first car early on in life. By the time you’re ready for a car of your own, you’ll be able to pay cash.
Making extra payments on existing debts
If you have outstanding debt from student loans, credit card balances, or other types of consumer debt, then saving money specifically to pay off that debt is another great goal to have. If possible, try to make extra payments on these debts each month – especially if they have a high-interest rate! This way, the amount you owe will decrease faster and save you a lot of money in interest fees over time. Understanding where your money goes is a great way to make a savings plan.
By mapping out your spending over a week or month, you can figure out where you can cut back and spend less in order to have more money left over for savings goals. If you consistently spend on unnecessary items, it might be worth taking a look at which areas of your life don’t add any value. Once you start identifying ways to trim the fat from your budget, you’ll probably find that there’s room to save in more places than one!
It’s never too early – or too late – to start saving for your future. That’s why having these particular savings goals in mind is so important: because they cover some major milestones in life and provide a lot of value in both the short term and in the long run!
