It is very common that as soon as you get some money, you want to spend it on many different things. Maybe on a trip across Europe? Drinks with friends? Or perhaps on personal things like nice clothing or new gadgets? We have to admit that all of those things sound pretty cool. However, before you start spilling your money everywhere, there are some saving goals you should consider to ensure a financially stable future.
To learn more, take a look at these four saving goals you might consider to keep your finances on point.
1. Build an emergency fund
Would you be prepared to spend a big chunk of money on a broken bone or a damaged car? You never know what’s going to happen in the future, that’s why an emergency fund is a must-have saving goal for everybody.
You don’t want to be caught off guard; therefore, you have to be prepared for anything. This fund could help you pay for any medical emergency or sudden domestic disasters, such as a damaged car, a broken fridge, or any house arrangements.
The amount of money you need on your emergency fund varies depending on your economical stability. To come up with an approximate figure, you’d need to take into account two things:
- A steady job: If you’ve had a steady job for several years, chances are you may keep it for the near future, so it could be easier to save money. On the other hand, if you work as a freelancer, you should pay more attention to your emergency fund, as it may turn difficult to find gigs during hard times.
- Income sources: How many income sources does your home have? In case of having only one source of income, you’ll need to save more money into your emergency fund per month. You don’t want to lose your job and face big expenses without a backup.
2. Big purchases fund
There are some high-ticket purchases you will want to make at some point in your life. A house, a new car, or family vacations, for example. You must set a saving goal for each big purchase you want to make. Also, make sure to set a deadline for each one to know how much money you’ll need to save every month.
A strategy that can help you to save for big purchases is the 50/30/20 rule. According to this approach, you will break up your income into three portions:
- 50% for needs: Half of your salary will be used for first need expenses such as food, medicine, or rent.
- 30% for wants: This will be spent on things you want to pay for but are not essential needs; such as electronics, clothing, or a special dinner. This is the portion set aside for your big purchases.
- 20% for financial goals: This amount of your salary will go directly to your savings and investments.
There’s no need to say that this rule will not necessarily fit everyone. You can use it as a guide, but feel free to adjust the portions according to your situation and saving goals.
3. Education fund
If you want to go to college or get a master’s degree from an important university, don’t forget to save money for your future education.
It’s common knowledge that employment competition is fierce nowadays. That’s why you should have good academic preparation to succeed in your career.
A master’s degree is a great choice to enhance your resume; nevertheless, its average cost varies between $30,000 and $120,000. This is not the kind of money you may necessarily have in your pocket, so having a saving goal for your future education is essential if you want to land a high paying job.
Extra tip: Keep on the lookout for scholarship opportunities. If you get one, you could use your education fund for higher-level education or any other saving goals in your financial plan.
4. Retirement Fund
Last but not least, we have the retirement fund. This is a crucial saving goal that you should consider. It will help you to live relaxed, and most importantly, to not depend on any kind of pension.
According to some experts, the ideal amount of money you should put into your retirement fund is about 15% of your salary (which can come from the 20% we talked about earlier, remember?). An important key factor to keep in mind is that the earlier you begin saving to reach this goal, the less you will have to put aside from your monthly earnings.
As you can see, having saving goals is important for your economical stability. They can help you outline a plan to reach your life goals in a shorter amount of time.
Remember to constantly check your future financial plans to choose the right saving goals and come up with good strategies. If you start putting aside a little amount of money every month, you will meet your saving goals before you even notice!