Tuesday, July 2

3 Saving Goals To Set

Setting specific financial goals is often the first essential step toward achieving your dreams. After all, if you don't have goals, you won't know what to do with your money -- and you won't know if you're on track to be prepared for important life milestones such as retirement. Unfortunately, it can be hard to figure out exactly what goals to set.

While everyone has their own objectives in life and their own unique financial priorities, there are four big savings goals most everyone should have for themselves. Here are those four goals, along with some tips to help achieve them.

1. Save for retirement

There are many ways you can estimate the amount you need for retirement. You could plan to save 10 times your final salary, or aim to build enough of a nest egg to replace at least 80% to 90% of the income you were earning right before retirement. For most people, these methods of figuring out an exact retirement savings number can be pretty complicated, especially if you're decades away from retirement.

It can be easier instead to just save a big enough percentage of your current income that you're likely to amass the funds you need as a senior. Experts traditionally recommended saving 10% of income, but this probably isn't enough thanks to longer life-spans and other economic factors.

Start with what your are comfortable with and slowly increase the amount you are saving to the required level. Whenever you get a raise, you can up your savings by the same amount. Example, if you get a 2% salary increase, consider raising your savings as well.

2. Save an emergency fund

Everyone needs an emergency fund. After all, according to Murphy's Law, anything that can go wrong will go wrong and it will probably cost you money when it does.

You don't want to rely on your credit cards or raid savings accounts for other goals when an unexpected expense happens, so you need a dedicated fund just to pay for these bumps in the road.

Ideally, your emergency fund will be big enough to cover three to six months of living expenses.

It can take time to save this much money, but budget as much as you can for emergency fund contributions until you hit your goal. If you're working on paying down high-interest consumer debt, though, you may wish to save up a baby emergency fund of around $500 to $2,000 (depending on income) and then devote extra cash to debt repayment. Once you've got your debt paid down, switch to concentrating on building up your emergency savings.

3. Save for big purchases

A new TV, a relaxing holiday, a new car. These are big items that's gonna require more than 1 month's salary. It may not be wise to take a loan everytime you wish to buy a big item as we all know the pitfalls of loans. Therefore it is a good idea to a goal to save for these things.

Set aside a dedicated savings accounts for each big purchase you hope to make in the future. Decide how much money you need for each buy, figure out your timeline for when you want to purchase, and then budget an appropriate amount each month so you'll have the cash you need when the time comes.

You'll save a fortune and can make purchases guilt-free because you'll have the money earmarked for just that expense.

Set your savings goals today

Setting financial goals allow us to easily track our progress. And you can make sure you're using money on things that are meaningful to you and that add real value to your life. Start by setting these 3 goals for yourself today!

If you are looking for more ways to save, check out the 6 Jars To Financial Freedom post.

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