Sometimes we get so focused on our retirement nest egg that we can lose sight of all the other goals we also may need or want to start saving for.
As soon as we have our diplomas in hand and land our first job, we’re encouraged to start thinking about our retirement savings goals. As part of that, we may ask ourselves questions like, will our new employer contribute to a 401(k) and help us create that nest egg we may need when we turn 65?
That’s a great question. But what about our other goals when we’re in our 30s, 40s, or 50s like saving for a home, starting a family, launching our own business, or taking that dream vacation? Saving for retirement is not the only area of your life that requires some planning if you’re going to accomplish all your goals.
Here are some of our favorite strategies, aligned with those big life goals and tips to help you make them a reality.
A home
Whatever your home goal looks like, the place to start saving is for a down payment. Some recommendations suggest accumulating 20%, but less may work, too.
The trick is to both define how much “free” cash you have to put aside, and be specific about your priorities, from smaller daily expenses to bigger ones that add up. Does your desire for those things outweigh the experience of having the keys to the perfect home?
A business
Whether you want to turn your side hustle into a full-time job or finally break ground on a shop of your own, starting a business is expensive and often requires a lot of preparation. That means planning for the start-up costs and the eventual unknowns and extra expenses that come with being a boss. There are also resources, grants, and other assistance from small business organizations. The Small Business Administration has tools and resources for entrepreneurs to explore how to get their venture off the ground.
A family
Even with health insurance, starting or adding to a family comes with expenses that can add up quickly. If available, adding to a Health Savings Account (HSA) can help. Contributions are tax deductible and growth can be withdrawn tax-free if used on qualified medical expenses. Plus, you can also roll over unused HSA funds.
The dream vacation
Whatever the destination, saving can help turn a life-goal vacation into a reality. Online tools can help you stay alert for deals. Tip: Include short-term goals like this as part of your budget, helping you figure out how much to put away after you’ve allocated for fixed expenses. You may also be able to balance travel priorities, such as a less-expensive flight on a less-popular travel day with lodging that offers great amenities.
Where to save for all your goals
When you need the money, whether that’s in six months or in six years, will determine where you need to stash each dollar you save. Here are some guidelines:
Short term savings: These are easily accessible funds you keep on hand, typically for emergencies or unexpected bills.
Mid-term savings: Mid-term savings are funds you set aside to pay for something special that’s anywhere from three months to a year or two from now. You’re not going to access the account daily, so you don’t need the convenience of a checking account. Instead, think about a high-yield online savings account.
Long-term savings: Long-term savings are those that you won’t need for three years or more. Because time is on your side, you may be able to earn a higher rate of interest. Consider a money market account, CD, or an investment account of your choosing.
A version of this article originally appeared on Her Money.
What’s next?
Need help setting up or fine-tuning your household budget? Use these budget planning steps (which include financial goals and budget worksheets) to help get started
