How To Save Your Money for Multiple Goals

When creating a budget, it’s important to set specific, achievable goals. Then, you’ll want to prioritize those goals to determine how much you’ll contribute to each one. It’s not enough to just name your goals — you’ve got to fund them as well.

This is where savvy, but simple, money moves come in. Here are some things to think about as you start saving your money for multiple goals:

Saving for short- and long-term goals

Think about both the short- and long-term goals you want to achieve. They should be a mix of the serious goals, like retirement and emergency savings, and the fun goals, like vacations and new tech. Anything you value or enjoy can and should be planned for.

You’ll want to take the different time horizons into account. In other words, when will you need the money to accomplish each goal? How much you value your individual goals and the urgency with which they need to be funded will determine how high a priority they are. Consider the example about how to build a budget for tips on doing this.

Saving for goals with different budgets and time horizons can pose a challenge. What’s important is knowing what will help you feel financially secure. You can then prioritize based on what you determine. Write out your financial goals, when you want to achieve them, and assign them all a percentage of importance. All your goals added together should equal 100%. You can see an example of this later. 

Having enough money for a large down payment on a home is a worthwhile goal, and the earlier you start saving for it the better. But if you’re young, you may have  a longer time horizon , so you may allocate less toward that for now until you can shore up some of your short-term goals, like building up your emergency savings.

 

Checking vs. savings accounts

Traditionally, checking accounts are used for your day-to-day purchases. Savings accounts are a place to store money you don’t need right away, but want the flexibility to withdraw when you need to.

If you only have a checking account, you may find yourself doing a lot of mental accounting. You’re manually keeping track of what money can be used for spending, which funds are for saving and then how much is for each individual savings goal. That’s why it’s a good idea to have a savings account in addition to your checking account. Note that these are in addition to a separate, long-term savings account for your retirement.

Yet, just like bunching your daily spending and savings money together in one account, bunching money for different goals into one savings account can get messy as well. You’ll have to remember how much money in that single account is to be used for what purpose.

If you find yourself in a position to save more than one goal at a time, you may consider opening multiple savings accounts. For example, perhaps you have a few relatively small, fun plans like saving for travel, concerts and entertainment and find it easier to group these similar goals together. But larger goals, like saving for a car or home, may work best in their own account. Separate accounts can make it easier to track your progress for those major milestones. You can even have accounts with different banks, credit unions or brokerages.

Note that this will mean you have multiple accounts to track and manage. You have to find a balance that works for you. You may find that it’s no problem mingling funds for two savings goals in one account.

When opening a savings account, you’ll want to look for accounts with terms that fit your needs. There are several banks offering savings accounts with no minimum balances, which are great options if you’re just getting started. Make sure to check if there are any monthly maintenance fees or other charges before signing up. You can open up an account and manage it completely online through many banks and credit unions.

High-yield savings accounts

High-yield savings accounts are worth considering, especially if interest rates remain elevated. A high-yield savings account tends to pay a higher annual percentage yield (APY) on your money than traditional savings accounts. Drawbacks of high-yield savings accounts can be that they may require a larger deposit or maintained balance to avoid fees, and the account may limit the number of withdrawals you can make per month. 

 

Bi-weekly money saving

One of the best ways to make sure you save consistently is to automate the process. An easy way to do this is to automatically transfer money for your various goals to your dedicated accounts every payday. If you’re paid twice a month, this means setting up bi-weekly transfers from your checking account to your other accounts.

If you’re able to save an extra $150 for your goals each month, for example, you’d schedule $75 each payday to be spread across your savings accounts in the amount you’ve prioritized them.

Here’s how it would work for the following sample savings goals:

• Emergency savings (50%): $37.50
• Home down payment (30%): $22.50
• Vacation (20%) $15

This person would set up transfers of those amounts to the accounts dedicated for those specific goals. Through this bi-weekly money saving method, they’re making incremental progress to their goals, without extra effort. This is only meant as an example, not a suggestion of what your goals should be. Everyone is different. Your goals and how you prioritize them will depend on where you are today, and where you want to go on your financial journey.

Putting your savings on autopilot can lessen the stress of having to think about how much you’re saving and when to do so. When you automate, it’s good to check in with the accounts regularly to keep tabs on your progress and monitor for signs of fraud, but you don’t necessarily have to be looking at them daily.

 

What's the benefit of saving money?

There’s an obvious benefit to saving money consistently — it can help you avoid high interest debt when an unexpected expense comes up. Though there’s another, less obvious benefit: Building healthy financial habits. No matter what saving and spending strategy you adopt, putting good habits to work consistently will serve your financial health well. Even if you’re only able to save a little money right now, your habits will serve you well as your net worth grows and your financial goals become more ambitious.

You likely have a lot going on, so taking time out of each day for money management may not be possible. Creating clear goals and automating your savings through bi-weekly money saving puts you on the right track — without the need for excessive work. You’ll simply need to make the occasional check-in to monitor your accounts, adjusting your goals as needed and moving money when you have to.

If you’re currently managing debt, it doesn’t have to stop you from thinking about and working toward your other financial goals. Read our blog for tips on how to save money while paying down debt.