If you’ve set out to improve your financial health this year, you’re in the right place. A key factor to good financial health is supporting your savings goals with a robust savings plan. But, where do you start? What is most important? Start by examining your personal or family goals and align your savings strategy from there.
Balancing multiple goals can be tricky, and it’s easy to feel overwhelmed. Use these tips to prioritize and maximize your savings plans.
Start with an emergency fund to cover unexpected life expenses, such as sudden unemployment, major car maintenance, or medical bills. Your personal circumstances determine how much you should put in your fund as well as where you should keep this money. We cover everything you need to know about establishing and building an emergency fund in this blog post.
Paying down debt may seem counterintuitive to saving more each month, but in reality, it can help you achieve your goals faster. Take a look at all of your existing debt and make a plan for paying off balances with higher interest. Take credit cards, for example. According to CreditCards.com, the average APR for credit cards currently sits at 16.15%. If you hold a high-interest credit card balance, aim to pay that down so you can put more money towards saving or investing.
The earlier you start to save for retirement, the better off you’ll be when it comes time for you to kick back and stop working. If your company offers a retirement plan, such as a 401(k), make regular contributions a priority. Many companies offer a matching program for employees who contribute, which is essentially free money. If you don’t have a 401(k) plan, you can open an Individual Retirement Account or IRA with Peoples Bank. An IRA is a retirement plan account that provides some tax advantages for retirement savings in the United States.
Short Term Goals
Setting short term financial goals and making a plan to reach them is important, too. Short term goals are those you aim to achieve within one to five years. This includes a down payment on a home, a vacation, or even your wedding. When you determine how much you need to save in the short term, it’s easier to work toward the plan and set aside money each month. It’s a good idea to establish a savings account for this goal that is separate from your emergency fund.
Savings goals vary from person to person and family to family, but one thing remains the same: you’ll never reach your goal if you don’t start planning. Every good financial plan starts with a budget. You can start yours today with this free Monthly Budgeting Sheet from Peoples Bank.