America Saves Week—the perfect time to set your savings goals and establish a plan for reaching them. We can help you accomplish that.
Set a Goal.
Pinpointing a clear savings goal is key to reaching it. The more specific your goal can be, the better. Many people have an idea of what they’d like to save for, but consider adding the following to your list if they’re not already there.
This should be your first savings goal because it’s a cushion against the inevitable emergencies of life, such as car repairs and medical bills. Experts recommend an emergency fund of three to six months of expenses in case of a loss of income.
Increasing your retirement contributions for 2018 is an excellent goal. For 2018, the maximum you may contribute to a 403(b) is $18,500 if you are under age 50. If you are 50 or older, you may contribute an additional $6,000. For IRAs, the maximum contribution for 2015 is $5,500 if you are under age 50. Those 50 or older may contribute $6,500.
Eventually everyone will make large purchases, such as a car, new refrigerator, or other desired item. Rather than assuming you’ll have to finance these things, make saving for them a priority. By proactively planning and saving, you can minimize or eliminate the possibility of future debt.
Many families desire to help their children pay for college. Setting up a Coverdell Education Savings Account (ESA) is a smart way to save toward that goal. The funds grow tax free and may also be used for qualified expenses during elementary and secondary school years.
Make a Plan.
Once you’ve decided on your savings goals and how much you’ll need, it’s time to make a plan. For instance, if your goal is to save $3,000 for emergencies, decide how much money you’re able to set aside out of each paycheck and then calculate how long it will take to reach your goal. This gives you a time frame for reaching your goal and can help you stay motivated.
Many people have multiple things they’re saving for simultaneously. In this case, it helps to prioritize your goals and set aside money out of each paycheck accordingly. If you need to build your emergency fund, save for retirement, and save for a car, then divide your savings amounts from each paycheck with the largest amount going toward the most important goal, then a smaller amount to the next goal, and so on. You may need to cut back spending in other areas, but a little discipline goes a long way to help you reach your savings goals.
This is an effective way to save for one simple reason—it removes YOU from the equation. By saving automatically, you won’t risk being tempted to use that money for other things and sabotage your own efforts.
If you have not yet set up automatic paycheck deductions for savings, America Saves Week is the perfect time to do so. While you’re at it, go ahead and establish automatic contributions for your retirement account(s). Don’t be discouraged if the amounts are small. You’ll be surprised how quickly it adds up.
If you are trying to save for an emergency fund, an upcoming purchase, or even a special vacation, AGFinancial is here to help. To learn how an AGFinancial Investment Certificate can help you reach your savings goals, call 866.621.1787 or email email@example.com.
What are you saving for?