Is your brain buzzing with ideas and plans? Whether your ambitions are big or small, long-term or short-term, follow these 6 steps to craft a savings strategy, so you have the dollars to make financial success a reality.
Grab a pen and paper and let your imagination roam. Think about goals you have now, where you think you’ll be in 5 years and where you want to be in 20 years. Maybe those goals include a new car, a house, a wedding, paying off credit card debt or adding to your retirement account. Financial management starts with planning.
- Crunch the Numbers
Estimate the amount of money you’ll need for each goal. Perhaps you have a goal of saving $1,000 for a new cell phone or $25,000 as a down payment for a new home. Or maybe you’re working to build your emergency fund. Knowing the numbers can help you be more specific with your timeline and savings strategy.
- Prioritize Your Goals
Make a list with your goals ranked in order of importance and include the cost and timeframe for each. You might decide to focus on one goal at the top of your list, or save for multiple goals at the same time. Just be careful not to shortchange long-term goals, like your retirement planning, while you’re focused on short-term needs and wants.
- Set Your Strategy
Look at your income and living expenses to see how much you can save every month. Be your own financial advisor and think about ways to trim your spending. Here are a few ideas:
- Drop unnecessary phone subscriptions or streaming cable service providers.
- Work with family members to sell items you no longer need, and put the cash into savings.
- Contribute to your savings account when you finish making all your loan repayments.
- Set up automatic transfers or direct deposits into your savings account from your checking account.
- Use the Right Tools
You can maximize your savings by choosing a bank account to match each of your goals. You can supercharge your short-term savings with a certificate or Money Market Savings Account, which generally offer higher dividend rates than with a traditional savings or checking account. An individual retirement account (IRA), 529 college savings plan and Education Savings Account (ESA) may offer income-tax advantages to help you save for long-term goals such as retirement savings, college tuition and student loan repayments. Use mobile* or online banking tools to set up notifications, make automatic transfers and check your progress.
- Make It Your Own
Tailor your savings plan to your specific goals, maintain realistic expectations and keep your eyes on the prize to stay motivated. Visual reminders may help.
If you need help putting a savings plan together as part of your personal financial plan, Navy Federal Personal Finance Counselors can help.
- Use a budgeting calculator to see how much you’re spending each month to get an idea of how much money you can put toward your savings.
- Next, figure out what your goals are. Are you planning a vacation soon or saving for a new car? Figure out the amount you need to save and create a plan to reach it!
This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.