December 5, 2022

We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
Financing a home purchase
Refinancing your existing loan
Finding the right lender
Additional Resources
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Compare Accounts
Use calculators
Get advice
Bank reviews
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Compare by category
Compare by credit needed
Compare by issuer
Get advice
Looking for the perfect credit card?
Narrow your search with CardMatch™
Personal Loans
Student Loans
Auto Loans
Loan calculators
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Best of
Brokerages and robo-advisors
Learn the basics
Additional resources
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Get the best rates
Lender reviews
Use calculators
Knowledge base
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Selling a home
Buying a home
Finding the right agent
Additional resources
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Car insurance
Homeowners insurance
Other insurance
Company reviews
Elevate your Bankrate experience
Get insider access to our best financial tools and content
Retirement plans & accounts
Learn the basics
Retirement calculators
Additional resources
Elevate your Bankrate experience
Get insider access to our best financial tools and content
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for .
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Here is a list of our banking partners.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
The importance of saving is stressed often, but saving money should be deliberate, too. How you save, and how much you save, will depend on what types of goals you’re saving for. Those goals will certainly change over the course of your life, but the strategies you learn will not.
Generally speaking, there are two kinds of savings goals: short- and long-term goals. Short-term goals are those that you expect to achieve within a few years, while long-term goals are usually at least five years out.
Here are the best ways to save for each kind of goal.
Short-term goals are typically achieved within six months and five years. They may have more specific deadlines than long-term goals. These goals include vacations, large retail purchases and recurring payments.
When setting short-term goals, make sure you have a plan that is specific and attainable. It’s important to plan ahead — even for something like buying a bike — so you aren’t left scrambling to make up for the sudden dent in your finances.
Long-term goals, on the other hand, are usually achieved after five years or more. They include things like retirement and paying off a mortgage. Long-term goals may not be as specific, and the timeline of the goal might be somewhat more flexible, but it’s still important to plan for these goals so they don’t end up getting neglected.
Additionally, because of the span of long-term goals, it’s important to revisit these goals at periodic intervals throughout your life. As changes in your life take place, such as getting a new job or starting a family, your goals might need some modification, and your savings plan will need to match that.
There are many different kinds of short-term goals that may require different strategies. It’s important to find a strategy that works best for the amount you need to save and how long you’re saving for that goal.
Putting your savings in the right account is one of the most important strategies for saving. Doing so creates a buffer against spending your saved money, helps you build your wealth with a high yield and can serve as a reminder of your savings progress.
When it comes to short-term goals, you’ll want an account that can easily be accessed when you’re ready to withdraw the money. A certificate of deposit (CD) is a good option for individual goals since it has a set maturity date that you can align with your goal. For example, if you want to go on vacation a year from now, a 1-year CD might be a good option.
However, if you’re looking for an account that you can put savings in for multiple short-term goals over time, you might want something with more flexibility than a CD, since you’ll usually be charged a penalty for withdrawing money from a CD before its term expires.
Some options for storing savings for short-term goals include:
Make sure to create a realistic savings plan for achieving your goal on time. This plan can be part of a monthly budget, in which a certain amount of your income is set aside for savings.
Suppose you want to save $3,600 to put a down payment on a car in a year. You’ll need to save enough each month to reach that goal over 12 months, which means you’d need to save $300 each month.
One tip to help ensure that you stick to your saving plan is putting money into savings as soon as you get your paycheck. Then, you won’t be tempted to spend that money. For the example outlined above, you’d want to transfer $150 into a savings account for every paycheck, assuming that the pay schedule is bi-weekly.
Automatic savings features are an advancement in financial technology that can make it easier to save. There are many mobile banking apps as well as third-party fintech apps that can automate your savings.
In most cases, the app user sets a percentage or dollar amount of how much they want to save each month, and that amount is automatically transferred into a connected savings account with each paycheck. Some offerings come with predictive tools that determine how much you can save based on income, spending habits and savings goals.
A few savings apps that are worth exploring include:
Perhaps the simplest rule to saving is to spend less. That may be easier said than done, though.
For short-term goals, look for areas of your budget where you can temporarily cut back on spending. Preparing your meals at home, for example, is something you could do for a few months to reduce how much you spend on food.
Cutting back on spending doesn’t mean you have to completely eliminate certain items from your budget. Rather, it’s important to find where you can make small changes across several categories.
Some ways to cut back on expenses include:
If cutting down on expenses isn’t enough to boost your savings, you could always make some extra money by selling stuff. And it’s even easier to do so now with the variety of online marketplaces available to consumers.
There are plenty of online marketplaces where you can sell everything from old clothes to vinyl records to used technology.
The savings strategies for long-term goals are focused on sustaining a savings plan over a longer period of time.
A long-term goal common to nearly everyone is retirement. A Bankrate survey from 2021 found that over half of American workers are behind on retirement savings.
The earlier you open a retirement account, the easier it will be to reach your retirement savings goals in the long run. There are generally two retirement account options: an IRA and a 401(k). With an IRA, you can choose between a traditional or Roth IRA. 401(k) plans are employer-sponsored, so contributions are deducted directly from your paycheck and often matched by the employer.
Fidelity suggests that you should aim to save 15 percent of your pre-tax income for retirement each year. However, that’s if you start saving at 25 years old. Depending on your current age and what age you want to retire, you may need to put aside more or less for retirement in your savings budget.
While it’s not necessary to keep short-term and long-term savings in separate accounts (besides retirement accounts), it might be useful depending on what goals you’re striving toward. It can be difficult to keep track of savings progress for long-term goals when it’s kept in the same account as other savings.
For example, if one of your long-term savings goals is being able to pay for your child to go to college, it would be helpful to have a specific college fund account. You could even open this account under the child’s name while contributing to it regularly.
Another option for keeping track of savings for different goals is to download an app that tracks your savings progress for you. Mint, for example, allows users to set specific savings goals, which they can portion out and track in the app.
It might be easier to save for short-term goals — because those goals are nearer, they may seem more tangible. However, long-term goals often align with significant life events, and it’s important not to overlook them.
One way to make sure these longer-term goals aren’t forgotten is to regularly check in with your budget. A budget can serve as a reminder of what your various aspirations are as well as keep your savings and spending priorities in check.
It’s helpful to remember that saving for long-term goals isn’t about making big sacrifices to prepare for the future; it’s about saving little by little so that you can feel fulfilled over time. You can still enjoy yourself now, while also aspiring toward higher goals.
Part of a long-term savings strategy may mean finding new ways to build your wealth. One way to do that is by pursuing passive income opportunities.
Passive income is a way to make money other than by working for an employer or contractor. In most cases, you put in a lot of the work upfront to establish a business or create something sellable, and then hope to collect the cash flow from that endeavor without having to consistently, actively participate in it. That extra income can pad your retirement or other long-term savings.
Some common ways of making passive income include:
When it comes to long-term planning, establishing and ascending in a career is not only financially rewarding, but also personally fulfilling. Focusing on a long-term career strategy means that you can work your way up in an occupation, doing something you enjoy.
In some cases, that might mean finding a new employer, if they have better potential for long-term career growth. Reflect on what you desire out of a career and what opportunities are available to you. Finding an occupation that is both satisfying and enriching will motivate you to advance in that career and reap greater benefits in the long term.
Most people will have a mix of short-term and long-term savings goals at any given time, and it’s important to attend to both. While a short-term savings strategy may focus more on establishing a concrete and calculated savings plan, long-term strategies are somewhat more flexible and require consistent reevaluation.
Remember, also, not to neglect having an emergency fund set up. An emergency fund might be part of a short-term savings plan, but it should be something you maintain and build throughout your life, to protect you from sudden expenses along the way of saving for other goals.
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
Bankrate, LLC NMLS ID# 1427381 | NMLS Consumer Access
BR Tech Services, Inc. NMLS ID #1743443 | NMLS Consumer Access
© 2022 Bankrate, LLC. A Red Ventures company. All Rights Reserved.

source

Leave a Reply