When you have multiple financial goals, you might struggle to juggle them all. Should you start by saving for your emergency fund? What about that vacation you’re planning? Can you really prepare for the holidays ahead of time for once? Ally Financial explains how saving for multiple goals is doable and easier with the right tools.
Follow these steps to evaluate, prioritize and, ultimately, save for your goals.
Start by identifying what you want to save for — maybe a new handbag, event tickets or a house. Make sure your list includes things you need or want, as well as the unexpected and less desirable, like a medical procedure or car repair.
After you identify savings goals, set target dates for each. This will help you figure out how much you should be saving on a regular basis to meet your goals on time.
Step 2: Calculate how much you can save
Now it’s time to see how much money you’ll realistically be able to put toward your goals. Compare your monthly expenses against your monthly income. How much do you have left over? This is the amount you can put toward savings.
If you don’t already have a budget in place, try the 50/30/20 plan. With this method, 50% of your income goes to your needs, 30% goes to your wants and 20% is put toward your savings and any debt you have.
Step 3: Prioritize, prioritize, prioritize
Equally dividing your monthly savings among all your goals may seem like the easiest method, but it might not be the best idea. Instead, look at your savings goals and choose your top three: one in the near future, one a few years down the road and one long-term. While you might have more goals than this, sticking to just a few while you’re getting organized makes it easier to keep track and save up.
Step 4: Be savvy about where you stash it
Based on what you’re saving for, you may want to use different types of accounts. When determining where to put your money, consider interest rates, risk and liquidity. For your short-term savings goals and your emergency fund, it’s helpful to keep your money in an account where it’s easily accessible, like a savings account.
Certain long-term goals, such as college or retirement, may be better suited for an investment account, depending on your timeline and risk tolerance.
Step 5: Make it easier with automation
Once you start saving, keep your momentum going. Some bank accounts offer automation tools, including recurring transfers and automatic roundups, so you can save even when you’re not thinking about it. Linking your spending and savings accounts makes it even easier to stay smart with the money you are earning now and your savings goals down the road.
Identifying financial goals with various timeframes and putting your savings on autopilot can set you up for the future.
This story was produced by Ally Financial and reviewed and distributed by Stacker.
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