5 Strategies to Save Money for Your Most Important Financial Goals

Saving money doesn’t sound like the most thrilling activity in the world, but keeping your finances under control and watching your funds grow can give you a major sense of accomplishment. 

You don’t have to limit yourself to saving for just one financial goal either. It’s possible to save for many things at the same time. Here’s how to save money for your goals by breaking them down and creating a different strategy for each one. 

How to Save for Different Goals

You’re not going to save for each goal the same way. Depending on how aggressive of an investor you are and when you’ll need the funds, there are different approaches you can take. 

1. Emergency fund

If you don’t have an emergency fund saved up already, now is the time to start. Financial experts agree that having an emergency fund that you can dive into if the unexpected occurs is crucial to your financial wellbeing. 

You’ll want to save for your emergency fund quickly and have those funds available whenever you need them. One of the easiest ways to tackle this goal is to track your spending and saving with a platform such as Mint. The service can alert you when your spending is trending upward and send reminders to stick to your savings goal. 

Open a high interest savings account to keep your emergency fund earning some money while you have it stored in case you need it.

2. Travel

Like an emergency fund, adding to your travel fund will be a lot easier if you track your income and expenses through a platform that shows you trends and sends you reminders. When you’re saving for travel you might also want to try a strategy called micro-investing.

There are many apps that facilitate micro-investing, which is basically invests your spare change. With the Acorns app, for example, your purchases are automatically rounded up to the nearest dollar and that extra money is invested into your account. 

A percentage of your purchase with qualifying partners is also put into your Acorns account which is invested in exchange traded funds. You can access the funds in your account easily when you’re ready to spend them. 

3. Retirement

You’re probably familiar with the most popular way of saving for retirement, which is a 401(k). If your employer offers a 401(k) match you should definitely try to contribute the maximum each year. 

However, this isn’t the only way to save for retirement. Depending on what point you’re at in your career, there might be other, more beneficial strategies that you can take advantage of. One of those could be the Roth IRA. 

With a Roth IRA you contribute post-tax income. That means you can’t deduct your contributions to a Roth IRA on your income taxes. Since this money has already been taxed, when you withdraw it in retirement, the funds are tax free.

Early in your career, when you are earning less and in a lower tax bracket, it might not be as important for you to get those extra deductions on your income taxes, so a Roth IRA could be prudent planning for this financial goal. 

4. Homebuying 

If one of your financial goals is becoming a homeowner, then you need to concurrently think about how to save money for a house in addition to your other savings goals. There are several ways to invest your money as you save toward this goal. 

If homeownership is in the near future for you, such as within the next five years, then you’ll probably want to choose a conservative savings method, such as a high-interest bank account. You’ll earn less money this way but you’ll also be more protected from market downturns. 

If your plan to own a home is a bit further out — such as 10 or 15 years away — you might consider working with a financial planner to create an investment portfolio that includes some stocks and bonds. Since the market can be volatile, most financial experts suggest investing in these long term so that you can successfully weather any downturns. 

5. Educational expenses

Whether you’re trying to fund your own education, continuing education or planning to help send a dependent to school, considering educational expenses is important to your long-term financial success. There are many different options to save money for school expenses. 

If you’re a parent trying to determine how to best save for your child’s education a 529 college savings plan might be an option to consider. 

With a 529 plan parents can invest after-tax income which can then be withdrawn to pay for qualified educational expenses. The funds in the account can be used to pay for graduate or undergraduate studies at accredited schools in the United States. 

Which strategies are best for you?

There’s no one size fits all approach to saving for your financial goals. That’s why it’s important to talk about your options with a financial coach or advisor who can help you assess the benefits and drawbacks to determine what method fits your lifestyle and financial values. 

You’re most likely to stick with a method that feels right to you, so don’t push yourself into something that you don’t feel comfortable with. Instead, take the time to review your options and begin a thoughtful financial plan that helps you hit your targets on your terms. 

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