Ask the Readers: How Do You Prioritize Your Savings Goals?

By Ashley Jacobs on 15 January 2013 58 comments
Photo: Chris Potter

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Everyone is always trying to save money for at least a couple goals. Whether it's an emergency fund, retirement, a car, a house, your kid's college fund, or that dream vacation you want to take, chances are you have savings goals of your own. Trying to decide how to prioritize your goals when it comes to savings can be tough especially if you only have a set amount of income you can set aside for savings each month!

How do you prioritize your savings goals? Do you focus on one goal at a time? Divvy up what you are able to save amongst all your goals?

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58 discussions

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Guest's picture

take it out of paycheck so I don't see or miss.

Guest's picture
Mary Happymommy

I focus on one savings goal at a time.

Guest's picture
Julie Syracuse

I prioritize one goal at a time. Right now it is an emergncy fund - so I can stop using credit cards when an emergency arises. Then I'm paying off the credit cards, and then I can start saving for retirement.

Guest's picture

Our savings goals are prioritized in terms of urgency, so it goes emergency fund (funded), retirement (ongoing), and college savings (ongoing). Emergency fund has highest priority because you never know when something will come along and knock your world sideways. It's followed by retirement because financial independence is key to being able to enjoy a stress-free life. College savings is lowest on the list because there is the possibility of scholarships or grants, and always the option of loans (public or private).

Guest's picture

We have all our known bills in our monthly budget, but the extras are prioritized by our timeline: when do we need the item in question, is there anything else more pressing, or does the emergency fund trump everything?. :) Most often, the emergency fund or our vacation fund wins.

Guest's picture

First, a visual reminder of the goal is always helpful. A photo of that car, house, vacation spot, new appliance or whatnot hung in a prominent place or placed inside your wallet in a visible location can help to keep your priority a priority and curb impulse spending. Second, challenge yourself to "donate" the cost of one truly unnecessary "spend" item each day to your savings goal -- whether a cup of coffee, a fast food treat, a candy bar, a movie rental, a new sweater or even your monthly cable. You'll be surprised how quickly your savings can increase... and how empowered you feel!

Guest's picture

I'm a divide and conquer type of girl. I like to set multiple goals and divide money equaling among them. The truth is that I hate making decisions, so this way I don't really have to prioritize them ;-)

Guest's picture

We always try to focus on one thing at a time and break the bigger goal of "budgeting" up into smaller goals so that we don't get too overwhelmed.

Guest's picture
Brenda Faulkner

I have to divide it between college and retirement.

Guest's picture

Right now I'm back in school, using my savings to avoid student loans. I'm working part-time, but it's not enough to contribute to savings right now. In the past, I used automatic deductions, and deposited any windfalls (birthdays, gas reimbursements, side income etc) right into savings.

Guest's picture

Pay myself first -- first thing to get paid is MY SAVINGS! That's the only way it works -- if you take your savings out of what's left after everything else, you will not have anything left!

Guest's picture

I focus on one goal at a time. Once I achieve it, I can think of another goal to work on

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Catherine Robinson

We have two on-going accounts that we are trying to build up--our emergency fund and our medical money. The emergency fund is important for obvious reasons. The medical money is important because we have a number of big health issues in our family. We have lots of medical bills, and can expect more in the future.

Guest's picture

I save to a general fund, then take out for vacations, etc, and try to replenish.

Guest's picture
Karen L

I focus on a maximum of 2 major financial goals at a time. I find if I'm focusing on more than that I am less able to achieve my goals.

Guest's picture
Heather Hayes Panjon

As A Family We Make A Budget With A Savings Plan And Support And Guide Each Other In Sticking To The Plan And Budget

Guest's picture

I try to look at the big picture, but I do tend to focus more on one goal. For example, right now, I'm saving for a cross country move. I'm also trying to have my car paid off by the three year mark, rather than 5.5 years. It's all part of the same goal but obviously in this case, my biggest goal is to have less debt. So I have been making enormous car payments each month and it should be paid off next month. I was still putting some toward savings each month, and I only started to really throw money at my car after I already had a decent-sized emergency savings. I don't think it matters how you prioritize as long as you DO in a way that works for you mentally, and keeps you motivated.

Guest's picture

I actually don't have any specific savings goals. I know to save a lot of money because my general "future" is important, but there's no x amount or competing goals.

Guest's picture

My savings were in the order of need. Recently it was my daughter's college, now focused on retirement. I'm hoping to see the numbers climb in that account!

Guest's picture
Shari Czerwinski

My husband and I are very goal oriented. For this reason, we set one short-term goal at a time and work like crazy to complete it. Then we move onto another goal. It helps us feel like we are accomplishing something, instead of having multiple goals and slowly contributing towards each, but never actually finishing them.

Guest's picture

We are saving for multiple goals at once, incorporating these costs into our monthly budget. We have them directly transferred every month so it's automatic and there isn't a constant temptation to spend that money. Our main goals are stocking up on the emergency savings, future car fund, and retirement accounts. We also have set up separate savings accounts for our different funds, to keep the accounting clear and simple.

Guest's picture

I have it automatically deducted from paychecks and I prioritize one goal at a time. Similar to the snowball effect for paying down debts.

Guest's picture

Whatever I'm saving for, it has to be taken out automatically without me realizing it. If not, I will not be able to save!

Guest's picture

I want to retire at 57 (maybe 55) and live comfortably, so I contribute to my retirement accounts regularly. I'm still young and far from retirement but know how quickly time flies. When that time comes when it hurts to wear high heels, my back is starting to ache, and my brain tired, I want to be able to say, "I'd rather be fishing," and have the means to do so. My emergency fund is ongoing because I feel that one can never save too much for emergencies. Once I reach a comfortable amount, I will, first, buy a nice bottle of champagne to celebrate, then start another savings goal.

Guest's picture

My goal is to take my children, their spouses and the grandchildren on a vacation every year. This is the 3rd year we have gone on a 7 day cruise. We start saving for the next trip as soon as we get home from the last one. I use cc points, money made from doing online surveys, coupon savings, any extra money to supplement the amount I save every month from my pension. I am retired and my husband pays our bills so "my" money is fun money.

Guest's picture
Rebecca B. A. R.

I always focus on one item at a time when saving. There are so many things that we are putting off that we need right now, b/c we are so poor, that I always have a running list of things to do or get when we have the extra money for them.

Guest's picture

I am rebuilding my financial world following a divorce and a number of financial set-backs. It's a multi-stage process. First I set up my automatic retirement savings (10%; it used to be 17% when I was married), and then from there I am prioritizing one goal at a time:
1) Get out of debt. I had an emergency fund, but it was minimal and my energy went toward paying off a credit card, student loans, and several costly car repairs. As of 2 weeks ago, I am out of ALL debt (woohoo!!!!).
2) Build up my immediate savings (6 months of living expenses). I set up auto-deposit into a new separate savings account and will be socking aside what I had previously used to pay off debt.
3). Save 20% for retirement. I recently realized how much my 401K is gouging me in fees and expense ratios, so I will continue to put only the 8% my company matches into my 401K, and the rest into my IRA.
4) I don't really have a next goal after that... I suspect my life will be in a different place then, so I'll know by then if I want to buy a house, or travel, or move to somewhere new. I'll leave goal #4 to the future...

Guest's picture
Miranda M.

I recently re-vamped my budget for the new year, and one way I did so was by making specific savings goals. Luckily, my job takes out my 401b pre-taxes, but I'm also adding an extra amount a month to my Roth IRA. In addition, I have to savings brackets of "Travel" and "Vacation", the difference being that my vacations are annual, where as my travel savings will be used for a big trip (probably to either Paris, or Thailand), within the next few years. Those two categories, which are equal amounts, are automated weekly to go into my connected savings account. Hopefully this will make the transition painless and make my dreams a reality! :)

Guest's picture

My plan is pretty systematic. 3 accounts: 1) Living Expenses Savings - For 3-6 months of expenses in case of job loss or injury; 2) Fun Savings - For travel or specific things that we want to save for; 3) Retirement Savings - For obvious reasons.

All three of these accounts are contributed to each month, though in different percentages depending on our needs and wants at the time.

Guest's picture

I try to save as much as possible. My current priority is saving a cruising kitty so we an sell our home and take off on a sailboat in two years.

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Lori P

We like to do more than one at a time, but that can be difficult. Right now our retirement is ongoing as well as our emergency fund. We have money removed from our check before we see it so it is easier. When we saved for our daughters college education is was last on our list because we knew that she could get FA, loans and work to get her education, but no one was going to help us with our retirement.

Guest's picture

I focus on just one savings goal at a time because, honestly, I don't have enough "extra" money right now to save for multiple goals while also paying down credit card debt. Plus I think I would have a difficult time staying motivated and organized if I was all over the place with it.

Guest's picture

Pay yourself first and focus on your goal. Put away small amounts and gradually work your way to larger amounts.

Guest's picture

For the longer term goals, like retirement, college savings, and paying off my husband's student loans, we're constantly working on them a little at a time. But there always seems to be one big goal that we work on aggressively. Right now that's saving for a down payment on our first home. We're almost there!

Guest's picture

I prioritize based on the size of the goal. Bigger goals (vacations, car repairs, emergency fund, etc.) get bigger allocations of money from each paycheck than smaller ones (bike repairs, camera equipment, etc.).

Guest's picture
Becky Charbonneau

Direct Deposit - $X Amount each paycheck.

Guest's picture

I divide my savings. I already have an emergency fund, so most goes for retirement but some is set aside for smaller goals, such as a vacation.

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Amanda Sakovitz

i'm limiting my unnecessary expenses and saving more. i think balancing your budget continuously is key.

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Thomas Murphy

I focus on one goal at a time

Guest's picture

Direct deposit to different accounts, I don't have to move the money manually

Guest's picture

I decide on a set amount to save each month, then pay myself first; after that, I pay the rest of my bills. If you begin young enough, over time you can save quite a lot of money by putting away small amounts. I wish I had started younger.

Guest's picture

I have two goals currently. First goal is my emergency fund which has to cover 9 months of living expenses in case of a loss and car repairs. Second goal is my retirement fund. I live on a budget and money for each of those goals is included in my monthly budget. I transfer the money at the end of each month into my savings accounts.

Guest's picture
Sarah C.

We do our IRAs first since we can't catch up on them later. Then our moving-out-of the country money comes second :)

Guest's picture

I take automatic 401k deductions at a high percent - 15% - and I try to live fairly thriftily (buying food that's on sale, freezing leftovers for future lunches or dinners, bringing lunch to work, not buying coffee when I can make it) but still have enough fun with my social life. I live in what can only be described as a pretty crappy apartment because as a renter I really can't stomach wasting money away on rent. I end up automatically accumulating enough in my savings account that I can comfortably book a vacation or buy myself a big-ticket item (laptop replacement coming soon) when I feel the desire/need. However I'm also privileged enough not to have college loans because my upper middle class parents provided me with a debt-free education or I'd have a harder time saving for luxuries/investing at a high rate in 401k.

Guest's picture

I am a college student right now, so my priorities may be a bit different. My boyfriend and I focus on an emergency fund. He was unemployed for six months last year. Using our emergency fund helped us to get through that period. Therefore, it is important for us to have that safety net. Next, we are saving for a car. And lastly, a house. The car and a house are future goals to help us settle into married life when the time comes. It is difficult having a set income every month. At times, it seems as though we will never achieve our goals. However, we keep striving to have financial security/

Guest's picture

I have several savings accounts. One is general savings account which I don't touch. This one is sort of an emergency fund or intended to big purchases, like a car or a house.
I also have another savings account, named Dental. I put money to this account, so when it's time to visit a dentist I can pay from this account. Instead of paying to dental insurance every month, I am putting the money away for later usage. The bank worker with whom I talked said that this is a very clever move.

Guest's picture

i focus on one goal at a time!

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Laura Jacobson

I prioritize my savings goals by putting away a little each week and keeping a good budget! I try to budget for the unexpected....and have alot of categories! Any extra in those categories that is not used that month rolls over to the next. AFter time, they add up for when needed!

Guest's picture
Debra K

We think of one thing at a time that we want to save for that isn't retirement and save up for it. But we make sure that money comes out of each paycheck for our daughter's savings account, our general savings account, and our retirement in addition.

Guest's picture

direct deposit. out of sight, out of mind!

Guest's picture

I plan what I need for each goal and contribute to all of them (retirement, daughters' college, vacations, car, etc.) automatically each month before I ever see the money in my checking account.

Guest's picture

We have an account for specific things and another for misc things that we want or that come up.

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Alexis Boudreau

I take everything out of my paycheck and have it direct deposited into separate accounts--401 (k), emergency savings, and short-term savings. I love Smarty Pig because it allows me to create multiple goals for no fee. For instance, I currently have a wedding, honeymoon AND wardrobe fund.

Guest's picture

Saving has always come naturally to me.
I just focus and plan ahead. When it comes to spending money, I wait and see if it is an item that is really necessary to have.

Guest's picture

I divvy my savings goals up between my different savings accounts that way I'm always prepared in case of a financial emergency

Guest's picture

I have my savings automatically deducted from my checking account as soon as my paycheck is deposited. I don't miss it because it feels like it was never there.

Guest's picture

I used to put money into a 401K and borrow against that for major purchases, but advise against if because if you change jobs, even for a major pay increase, it can sink you as you have to be able to repay it in a short period of time or pay massive penalties if you can't get a loan. I had to put nearly $3,000 in tax penalties high interest credit card.

I wish I could afford to have saving goals now, but as a single parent that has had to change jobs and suffer unemployment three times in the past five years through no fault of my own for extended periods, I don't have that luxury.

Instead, my goal has been to always pay as much as I can on my credit cards (and try not to use them) to keep my rating up so my cards so if I have to pay rent with a cash advance until unemployment kicks (which thankfully was only once) I can so I can keep a roof over our head.

Guest's picture

Right now we're concentrating on our emergency fund.