There are so many big events in the road of life. Many we start dreaming of when we’re younger: first car, college, wedding, new home, having children; while others pick up steam as we move ahead in our careers. However, they all share one thing in common: the need for large amounts of money. If what you’re saving for is close at hand or far off into the future, there are a variety of ways to start building a cash reserve you can rely on when the day comes.
- Start Saving Now
Time is your friend. The sooner you start saving, the better off you’ll be when you need to tap that money. Keep your money in a high-yield savings, certificates of deposit (CDs), or money market funds. It pays to periodically shop around, too. Invest in stocks and bonds to take advantage of your money compounding over the years.
- Keep it Simple
Whatever you can do to make savings automatic, set it up. Have your employer automatically deposit a portion of your paycheck into a separate savings account to keep you contributing consistently. Or set up funds for one or more financial goals and take those monthly payments as seriously as you do paying credit card bills. Remember, you’re investing in you."
- Set a Goal, Pick a Timeline, and Stick To It
What’s on your list? Write it down and set a date for how much you’ll need and by what date. Being clear on what to save for and why will help you put a plan in place that will pay off later:
- Education - Invest in a 529 college savings plan offering tax and financial aid benefits. You can also use this money for K-12 tuition. Ask your family to contribute each year for birthdays and holidays.
- Wedding/Honeymoon - Use all or a portion of cash wedding gifts you receive to pay related expenses.
- Vacation - Plan way ahead to lock in lower rates for flights, lodging and excursions. Think about a home swap. Review previous trip expenses and plan accordingly.
- Retirement - Aim to contribute the maximum to employer-matching 4O1Ks. Don’t pass up this free money.
- Make a budget and don’t touch it!
No matter what big life event you’re saving for, figure out what you have to save each month or year to reach your goal. There are a number of great apps that can help you map out your plan, track your progress and motivate you to keep saving. While there may be times when it’s tempting to borrow from your special fund, don’t do it. Make it a priority and have patience.
- Find ways to raise more cash
It’s amazing how everyday expenses can add up. Take a close look at where your money goes and see what you can change or eliminate and roll that money into your savings:
- Resist expensive coffee runs, dine out less and eat in more
- Cancel gym memberships, magazine subscriptions, and streaming services you’re not using
- Lower the thermostat, swap out lightbulbs for LED, and lower water heater temperature
- Visit the library for books, videos, CDs and other free entertainment options
- Shop around for better rates on cell phone service, cable, electricity, oil and other utilities
- Review your health/home/auto insurance plans each year
- DIY - Car repairs, home maintenance, landscaping, house cleaning, and more
- Get a side gig
Having a second job might not work for everyone, but if you’re good at something that you can do on the side... just think of all that extra cash you can put towards what’s most important to you. You can start an at-home business, offer your services as a consultant, take on a part-time job, or go in on a weekend or project-based business with a friend or family member.
Meg Schutte is a Bank of Hope Blog contributor.
The views and opinions expressed in this article do not necessarily represent the views and opinions of Bank of Hope.