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Purposeful Savings Goals: How to Save and Reach Them

Whether saving for emergencies, short-term purchases, or long-term financial security, having a purpose behind your savings goals can make all the difference.

Are you saving money? Do you find yourself making more excuses for not saving than actual money in your savings account? If so, it’s time to rethink your approach to saving and adopt a more purposeful strategy.

Remember these: Saving money is important. Saving consistently is key. Saving early is impactful. And saving purposefully helps you reach your goals.

Let’s explore how you can save with a purpose and take control of your financial future.

Overcoming Common Barriers to Saving

Many of us struggle to save money despite understanding its importance. Here are some common barriers and how to overcome them:

  • Mindless Spending: Mindless spending leads to overconsumption and dissatisfaction. Challenge the belief that you cannot save money and start with small, manageable amounts.
  • Lack of Discipline: Automate your savings by setting up automatic transfers from your paycheck to a savings account. This ensures consistent savings and keeps you motivated to continue saving.
  • Lack of Purpose: Adopt a purposeful savings strategy by identifying specific goals for your savings, such as building an emergency fund, funding vacations, or saving for retirement.

Don’t know what savings accounts to have? Start with the purposeful savings plan.

The Purposeful Savings Goals

You want multiple savings accounts to help you prioritize important goals and track progress. Separating my savings into different accounts was a game-changer for my finances. It kept me from taking money from an account for unrelated purchases. I became more accountable to my goals.

With the purposeful savings plan, you save for emergencies and your short-, mid-, and long-term goals. The plan has five distinct savings goals:

Rainy Day Fund

The rainy day fund covers expenses related to unforeseen events, such as car repairs or medical emergencies. Aim to have at least the equivalent of your auto insurance deductible saved. That means starting at $500.

Opportunity Fund

Save enough to cover six months’ living expenses to weather periods of unemployment or underemployment. Having money to cover your expenses during unemployment allows you to explore opportunities you couldn’t do before because your time was spent working. Learn more about opportunity funds.

Experience Fund

Set aside funds to cover expenses related to vacations or time off to recharge and relax. Aim to have 1 month of savings for wellness-related activities.

Freedom Fund

You should save enough to cover your living expenses for an entire year, which will give you the freedom to explore new opportunities or take a sabbatical from work. I am a big proponent of taking time off during a career. It’s the perfect way to reset and recharge and make the necessary pivot in life.

Cash Reserve

A cash reserve protects your peace of mind. Save 24 months of living expenses to cover prolonged unemployment or economic downturn periods, so you’re not tapping into your retirement accounts. Your cash reserve can take advantage of CD laddering or invest in the stock market through low-risk index funds.

How to Set Up Your Purposeful Savings Goals

Purposeful saving involves setting clear goals and intentions for your savings, as well as developing strategies to achieve those goals.

Step 1: Prioritize Purposeful Savings Goals

Not all financial goals are created equal, and it’s essential to prioritize them based on their importance and urgency. Start by distinguishing between short-term, mid-term, and long-term goals. With the purposeful savings plan, you’ll want to prioritize creating the funds listed.

  • Rainy day fund
  • Opportunity fund
  • Experience fund
  • Freedom fund
  • Cash Reserve

Step 2: Choose the Right Accounts

Select a savings account that aligns with your goals and offers competitive interest rates or investment returns. You can use any savings account to achieve your purposeful savings goals. You have options.

TYPE OF SAVINGS ACCOUNTDESCRIPTION
Traditional Savings AccountBanks and credit unions offer traditional savings accounts, a simple way to save money while earning interest. They typically have low minimum balance requirements and are accessible for everyday banking needs.
High-Yield Savings AccountHigh-yield savings accounts offer higher interest rates than traditional savings accounts. They are often offered by online banks and may come with no monthly fees or minimum balance requirements. They are ideal for savers looking to maximize their returns.
Money Market AccountMoney market accounts combine the features of savings and checking accounts. They offer higher interest rates than traditional savings accounts while providing check-writing privileges and ATM access. However, they may have minimum balance requirements and limited transaction capabilities.
Certificate of Deposit (CD)CDs are time deposit accounts that offer fixed interest rates for a specified term, ranging from a few months to several years. They typically offer higher interest rates than savings accounts but require you to lock in your funds for the duration of the term.

Step 3: Cash Flow Your Money

Once you’ve identified and prioritized your savings goals, it’s time to allow your money to flow toward your objectives. A cash flow plan is a tool for managing your finances and ensuring you allocate your income effectively to saving. Track your spending, identify areas where you can cut expenses, and allocate a portion of your income to each purposeful savings goal.

Learn how to cash flow your income.

Step 4: Use Multiple Savings Accounts

Multiple savings accounts allow you to compartmentalize your savings for different purposes. This structure makes tracking progress toward each objective easier.

SAVINGS GOALGOAL
AMOUNT
INITIAL DEPOSITMONTHLY CONTRIBUTIONPURPOSE
Rainy Day Fund$500Cover unexpected expenses
Opportunity Fund6 Months
Living Expenses
Cover periods of unemployed or underemployment
Experience Fund1 Month Living ExpensesSave for a dream vacation.
Freedom Fund12 Months Living ExpensesCover periods of unemployment or underemployment
Cash Reserve24 Months Living ExpensesCover extended periods of unemployment or economic downturn.

Step 5: Automate Your Savings

One of the most effective ways to save purposefully is to automate your savings. Set up regular automatic transfers from your checking account to your savings account. Treat your savings contribution like any other bill that needs to be paid each month. Automating your savings ensures consistency and removes the temptation to spend the money elsewhere.

PROCESS
Action
Contact Your Bank
Specify Frequency
Determine Transfer Amount

Setting Up Other Purposeful Savings Goals

Ask yourself: What do I want to achieve with my money? Do I want to build an emergency fund? Save for a down payment on a house? Fund my children’s education? Travel the world? Retire comfortably? By identifying your goals, you can create purposeful savings goals.

Take the time to identify your short-term, mid-term, and long-term savings goals. Be specific about what you want to achieve, when you want to achieve it, and why.

Keep this in mind: What is the purpose of your savings goal?

Purposeful saving empowers you to take control of your finances, prioritize what matters most to you, and make intentional decisions with your money.

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of phroogal.com and thesmilelifestyle.com. His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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