Money management comes with several different priorities. From bills to debts and savings, there are many things to deal with. However, certain goals require consistent savings. Below are the top 5 savings goals you should consider incorporating into your financial plan.
1. A fully-funded emergency fund
Emergencies come in different forms and sizes. It is even worse that no one knows when it will happen. Imagine having a financial emergency when you are least buoyant? This is why you need to prepare properly for these rainy days, and one of the best ways to do this is work towards a fully-funded emergency. In most cases, such a safety net is worth six months’ worth of expenses or a year for self-employed people. Your emergency fund will come handy in case of a job loss or an expensive car repair.
For your emergency fund, open a different high-interest savings account with automatic contributions enabled. You can decide to stop saving once you have enough that can cover you whenever an emergency surface. So, if your basic monthly expenses is $5,000, your emergency fund would be $30,000. Huge, right? Yes, it is, but it is achievable if you stay consistent. Once that is sorted, you can focus on other goals in your financial plan that needs commitment.
2. Retirement
People who are smart about personal financial planning will not delay their retirement planning until when retirement itself is close. Your retirement planning should start immediately you start earning. Fund your 401(k) as well as your employer’s match (if any). If 401(k) is not accessible, consider saving through a traditional or Roth IRA.
You will need to be consistent with this goal, even if it appears like you have more time to get it done. For best results, automate the funding of the retirement account and forget about the account. You may revisit it if any big life event shows up, perhaps, an unexpected income drop or the arrival of kids and relocation.
3. Your Big Life Dreams
A well-mapped out financial plan should not be limited to retirement and emergencies. In fact, it is recommended that you work towards your Big Life Dream. This dream might come in different forms – including retiring after some time or relocating abroad for some time. It might be the wish to be a homeowner or acquiring a top business. Whatever it is, you need to save towards it. And with the dream integrated into your financial plan, you can ensure it gets the necessary financial flow without hurting your overall financial balance.
4. An Opportunity Fund
Emergency funds are common with personal financial planning. However, opportunity fund is another important financial goal worthy of consideration. In simple terms, it is a savings account that contains enough fund to explore those rare opportunities that come our way in life.
For instance, a special invitation to travel abroad for an event would not be halted if you have an opportunity fund. It could be a professional training opportunity, which if taken, would turn around your professional status and career. Your opportunity fund would come handy in such cases, helping you to seize those opportunities without your finances suffering.
An ideal opportunity fund should be about $2,000. However, despite having the fund, do not go for an opportunity until you have properly evaluated and confirmed they are necessary. But when you finally get a good one, tap into your opportunity fund to get it done.
5. Purchase big-ticket items with cash
From expensive electronics to cars and computers, we have a long list of big-ticket items. Although you might have all these at the moment, chances are you will eventually require replacements. Most people go into credit card debts to fund such replacements. However, you can avoid such debts if you have special savings to fund such items.
Saving as low as $30 monthly over a long time will give you enough money to buy most big-ticket items. You can integrate this into your financial plan to ensure consistency and seriousness. And when the time to make such purchases come, you would be financially buoyant enough to buy without entering into debts.
Getting started
You don’t need much to start working on your financial plan’s top savings goals. You will need different savings account for each savings goal, and if it helps, nickname each account to reflect the proposed use of the funds they contain.
With enough money in the bank in the form of savings, you have the peace of mind and the concentration needed to execute your financial plan successfully.
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