Four Savings Goals You Should Set Today
A financial advisor explains how to set a budget, pay off debts, and open a high-yield account.
As children, we saved our allowances for something new at the toy store. As teens and young adults, we saved our dollars from working part-time jobs. Now, adding to your savings account is more important than ever before as we struggle to pay off emergency expenses on top of household bills during quarantine.
Still, it's easier than you think to set realistic, manageable savings goals for yourself. After consulting with a financial advisor and setting your own personal budget, here's what to do.
Audit Your Finances
Colleen McCreary, chief people officer at Credit Karma, says that the first goal of saving money is to audit your finances. True, the amount you should save each month is subjective, but as McCreary suggests, "the first step to take before you start saving is to conduct a comprehensive audit of your finances." She continues, "In order to see how much money you'll be able to set aside in savings, you need to have a good understanding of where your money is coming from and where it's going." Think of setting aside extra money that you would otherwise spend on those "nice to have" items or trips to the coffee shop as building up your rainy-day fund slowly over time.
Start Now, Even If It Means Small
Money-saving goal number two: start saving now. "The best time to start saving is right now," says McCreary. "The worst thing you can do is wait. There is no magic date for the best time to start saving. Even if that means you have to start small, start now." She continues, "Oftentimes, the biggest hurdle to get over is just getting yourself started. Once you get started and get into a habit of saving on a regular basis, you may find it's easier to continue to save for the coming months and years."
Get Into a Micro Mindset
Naturally, saving money comes easier for some than others which leads to the third savings goal—starting micro small. McCreary suggests implementing micro money-saving goals each month in order to set yourself up for success. McCreary shares, "One the workaround is to set micro-goals for yourself. If your goal is to pay off your debt, you can set other goals to help you get there, like make a plan for how you'll reach your goal or pay off a certain percentage of that goal. If your goal is to save, start small—with a number that feels manageable—and work up from there."
Open the Right Savings Account
The fourth and the final goal to take action on is to open a high-yield savings account. A high-yield savings account is a place where your money can earn interest over time as opposed to the lower rates of a conventional savings account. "The sooner you start saving, even if it's just a few dollars a week, the more impressed you'll be by how much more you can save over time," says McCreary, continuing, "Credit Karma Money Save is an example of a free, convenient high-yield savings account."
Whenever that unexpected expense does happen, with these money-saving goals in place, you'll be ready.
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