How to prioritize savings goals

Financial advisors can help you figure out where to save your money. Different banks' services and digital tools can help you set up how to do it.

But why are you saving in the first place? This is a question that only you can answer, based on your own goals and whether you want to meet them sooner or later.

Once you know why, you’ll be able to set your priorities and take the necessary actions for success.

Short- and long-term objectives.

Generally speaking, anything you'll need money for in less than five years could be considered a short-term savings goal. Examples may include a wedding, home renovation project or family vacation.

Long-term goals are often bigger savings targets like buying your dream home, saving for a child's future college tuition or building a retirement fund. These goals typically take five years or more to save for.

Steps to prioritize savings goals.

Taking these actions now can help you achieve your savings goals.

1. Make a savings plan.

Write down your savings goals and be as specific as possible: "Save $2,000 for a family vacation for next summer" or "Retire with $1,000,000 by 2040." This helps attach the goal to what's important to you, so you can keep your eye on the end result.

Once you've made a list, determine which goals are short-term and long-term. This will help you determine how long and where to save your money. From there, you can estimate how much you’ll need to save each month to meet your goal.

2. Check your budget.

It's one thing to know how much you need to save to meet your savings goals, it's another to know how much you can afford to save. Review your spending plan to see what you can start saving today and look for small expenses you can cut back on to free up more for savings.

Don't have a spending plan? USAA offers resources that can help you allocate your income and expenses, like a simple budget worksheet (Opens in a new window) and a free online budgeting tool. Use that information to create a savings plan specific to your goals. Talk to a financial advisor if you need help creating a plan.

3. Consider saving for emergencies before paying extra on debt.

This is a fun but controversial topic since the math may tell you differently. But unexpected things happen, and they can be expensive. So before tackling extra debt payments, consider saving for emergencies first.

To do that, review your income and expenses to decide how much to save for emergencies. Start small and build a baseline amount that’s comfortable for your personal finances. This may be $1,000, $2,000 or another amount that gives you a comfortable cushion. From there, you can consider paying above the minimum required payments on your debts.

Eventually you want an emergency fund that’s enough to cover between three and six months of your necessary expenses. This may help you avoid dipping into your long-term savings or taking on more debt to cover an emergency, two actions that will make it harder to achieve your goals.

If you do need to use some or all of your emergency fund, try building it back up as soon as possible.

4. Pay down high-interest debt.

High-interest debt can easily obstruct your path to saving. Say you pay the monthly minimum on your credit card while regularly using the card to make purchases. After paying the minimum, the interest charged against the remaining balance can quickly exceed the amount you spent on your purchases in the first place.

In this case, once you have that baseline emergency fund, it may be more beneficial to redirect some of your monthly savings to make above-minimum payments on your debt. This will help reduce that growing interest amount, which means you're saving money.

At the end of the day, the order in which you prioritize your savings goals is up to you. But having some foundational items like a spending plan and an emergency fund in place can help you handle unexpected expenses along the way.

How to stay on track with your savings goals

The best way to stick to saving is to make it as easy for yourself as possible. If you're often tempted to spend, automation might be your best friend. Different financial institutions offer different account features and digital tools that can help. Some methods include automatic transfers and direct deposits.

Next are common sense methods that may be more difficult because they often require modifying your habits. But the results can add up quickly to help you reach your goals:

• Spend less, even if it's just a few bucks here and there. Go to the movies during matinees when ticket prices are cheaper, order a smaller size drink at the coffee shop, bring your lunch to work a couple of days each week.
• Stop spending where you don't need to. Cancel memberships and subscriptions that you don't use, and remove shopping apps from your devices if you find them too tempting.
• Stay consistent, even when it's hard. Eventually your new habits will become second nature, and you'll see the rewards reflected in your savings balance.

Some things to remember as you're taking steps toward your savings goals: First, saving isn’t easy, but it pays off. And second, delayed gratification can be challenging, but seeing your progress will motivate you to keep going and achieve your goals.