Saving for future goals encourages a strong financial foundation. As your savings grow, you’ll reap more than financial security — you’ll gain the flexibility to enjoy your life.

If you’re struggling to save each month, or you’re just not sure where to start, this article lays out a simple system that can help.

How to save for any scenario in 5 steps

As you build a plan to reach your savings goals, think about how soon you want to reach them. Are they:

Understanding your time frame will be an important part of your strategic planning as you work through these five steps.

Step 1. Set concrete savings goals

The first step in reaching any goal is to define it in terms you can track. Instead of “saving for a house,” for example, try to get more specific — “saving $25,000 for a down payment on a house.”

For short-term savings goals you expect to reach within a year or two, you can generally budget around current prices. Shop around for whatever it is you want and compare price tags. While you’re at it, sign up for special sales and deals notifications so you can get a feel for how that price fluctuates and when the best sales are throughout the year.

Longer-term goals, on the other hand, require more of a “cushion” against rising prices. Plugging the current price into an inflation calculator can help you estimate the future cost you’ll need to save up for. 

As you’re setting your goal, be sure to think about all the costs you’re going to need — from accessories to sales tax. For a kitchen remodel, that might look like materials as well as labor costs. Other purchases may come with additional fees, such as closing costs on a house or travel insurance for international vacations. Many larger goals also carry ongoing expenses you’ll want to plan for, like home maintenance. 

Step 2. Build a savings budget

Once you have a concrete savings goal, work out a budget to see how much you can afford to save toward your goal each month.

Start by noting your monthly income using your after-tax earnings and adding up all your monthly expenses. (You might need your paystubs and bank statements for this one.) Any income you have left after paying bills is the maximum amount you can afford to save each month. 

If you think budgeting is boring or time-consuming, we don’t blame you. With Simplifi, it doesn’t have to be. Simplifi figures out your monthly spending plan and how much you need to save each month to reach your goals—in one easy app!

If your monthly leftovers are looking slim or if you want to boost your savings power, consider cutting some expenses. Maybe you’re paying for too many subscription services or you eat out ten times a month. Any dollar you can cut is another dollar you can save for your future. 

Don’t slack on your emergency savings

Remember, no matter what you’re saving up for, you’ll want to have some emergency savings too. Your emergency fund is there to catch you when unexpected expenses try to trip you up. Be sure to budget something for emergencies so you don’t have to tap your wedding fund to pay for car repairs. 

Step 3. Set specific timelines

Your budget and your savings timelines depend on each other. Saving more each month moves your timeline up, and having a longer timeline means you don’t need to save as much each month.

For example, if you have $500 each month that you can add to your savings goals, you’ll get there a lot sooner than if you can only squirrel away $50. By the same reasoning, the longer you have to save, the less money you need to add each month. 

Some goals, like birthdays and winter vacations, might have fixed “due dates” at the same time every year. Others, like saving for a TV or retirement, can be more flexible.  

Start by setting a rough timeline for every goal. Remember, there’s always room for give and take. Even the most unlikely goals become achievable if you’re willing to prioritize them above everything else. 

Step 4. Put your savings plan together

Now that you have your goals, budget, and timelines in hand, it’s time to set up your savings plan. While everyone’s plan will look a little different, the following tricks can put you on the right track. 

  • Prioritize your goals. Chances are, you’re saving for more than one goal at a time — particularly your long-term dreams. Prioritize your savings goals in order of importance and affordability to help with the next steps. 
  • Build your savings into your budget. Revisit your budget and decide how much of your monthly savings you want to put toward each goal. This is where it all comes together: your goals, priorities, costs, and timeline. By building your savings into your budget, you’ll never miss a “payment” to yourself. It also helps you visualize your goals as smaller chunks — saving $6,000 a year seems like a lot, but $125 a week feels more manageable.
  • Separate out the funds for each goal. Mingling all your savings in one account makes it harder to track your progress. Set up individual accounts for at least your largest goals to stay motivated and avoid spending those savings — or just add your goals in Simplifi and see all your savings separately, without a dozen different accounts!
  • Automate your savings. Setting up automatic transfers between your checking and savings accounts keeps your money “out of sight, out of mind.” Most banks allow you to schedule regular, automatic deposits to keep you on track and prevent blowing your savings budget. (Or just do it in Simplifi so you can “move” your funds to your goals without literally moving them.)

Step 5. Avoid overspending

After doing all that hard work, it’s important to stick with your budget. Overspending occasionally isn’t the end of the world — everyone needs a “me” day once in a while! But if you often end up over budget, you might need to re-examine your expenses, reprioritize your goals, or increase your income. 

A special note on retirement savings

Out of all your life’s goals, figuring out how much to save for retirement is easily one of the most complicated. (Assuming you don’t have a working crystal ball, that is.) If you’re feeling overwhelmed trying to predict the future, our free retirement calculator can help.

The best ways to save up and grow your money

For longer-term savings goals, you’ll want to make sure your money keeps growing so inflation doesn’t devalue it over time. 

Let’s say, for example, that you want to buy a house. As the price of your dream house increases over time (because of inflation), the total amount you need to save rises too. But if the money you’re saving up can also grow with inflation, or at least make up some of the difference, it will be easier to keep your timeline on track despite that rising price tag. 

The following accounts all provide ways to grow your savings. Though some methods may not keep pace with inflation, the trade-off is that there’s historically been a lower risk of losing money in those methods. 

Savings accounts

Banks offer savings accounts that pay interest while keeping your money within reach.   

Pros:

  • Most have low minimum deposit requirements
  • Deposits are protected by FDIC or NCUA insurance 

Cons:

  • Lower interest rates than other savings options
  • Banks may charge monthly maintenance fees 
  • May be limited to six (penalty-free) monthly withdrawals 

High-yield savings accounts

High-yield savings accounts are commonly found at online banks or less well-known banks and offer more interest than the national average. 

Pros:

  • Higher interest rates than regular savings accounts
  • Deposits are protected by FDIC or NCUA insurance
  • Typically charge lower or fewer fees

Cons:

  • Many online banks don’t have physical branches
  • You may not have access to free ATM withdrawals
  • Transferring funds can take a few days
  • May be limited to six (penalty-free) monthly withdrawals 

Money market accounts

Money market accounts offer some features of both checking and savings accounts, like check-writing privileges and interest on savings. 

Pros:

  • Typically pay higher interest than traditional savings accounts
  • May have check-writing or debit card access
  • Most are FDIC or NCUA insured

Cons:

  • May have higher minimum deposit requirements
  • Higher interest rates typically paid on larger balances
  • May carry monthly fees
  • May be limited to six (penalty-free) monthly withdrawals 

Certificates of deposit

Certificates of deposit (CDs) lock up your funds for a set time period while they earn interest. (Anywhere from 1 month to over 5 years.) Many savers “ladder” CDs — buy CDs with differing maturity dates — to keep their money liquid and growing. 

Pros:

  • May pay above-average interest rates
  • Typically charge no monthly fees
  • Can easily roll mature CDs into new accounts

Cons:

  • Early withdrawals may carry financial penalties
  • Require you to lock your money up for a fixed period
  • Higher rates typically only available on longer terms

Bonds

Bonds are essentially loans you give to an entity in exchange for interest payments plus your returned principal. Bonds take many forms: government and corporate; short- and long-term; fixed and variable rates; etc.  

Pros:

  • Provide regular income 
  • Historically less risky than some other investments like stocks
  • Can choose maturities ranging from months to decades
  • Some bonds peg interest rates to inflation

Cons:

  • May have high minimum purchase requirements
  • Higher-paying bonds tend to carry more risk
  • Some charge early sell/withdrawal penalties
  • Bond prices tend to fall when interest rates rise

Investment brokerage accounts

Investment brokerage accounts allow you to add stocks, bonds, ETFs, mutual funds, and other assets to your portfolio. 

Pros:

  • Potential for high investment returns from a variety of asset classes
  • No contribution or income limits
  • Control over your investment decisions

Cons:

  • You risk losing money
  • Typically more suitable for long-term goals
  • You have to hold assets for at least a year to qualify for lower tax rates
  • No tax-advantaged accounts

Retirement accounts

Retirement accounts incentivize you to contribute savings to your retirement and invest. For example, while traditional individual retirement accounts (IRAs) defer taxes until retirement, Roth IRAs let you pay tax upfront and make tax-free retirement withdrawals. 

Pros:

  • Tax-advantaged accounts
  • Several options, including workplace plans (401ks, 457s, etc.) and individual retirement accounts (IRAs)

Cons:

  • Accounts have annual contribution limits
  • Not everyone qualifies for every kind of account
  • Early withdrawals carry a 10% penalty 

Track your savings goals

Whether you’re saving for a pool, a house, or the unknown, set up a strategy to save consistently and be sure to track your progress. The more attention to pay to your long-term savings, the more likely you are to reach those goals.

That’s why Simplifi lets you add as many savings goals as you need. Save for holiday gifts, your kid’s college tuition, and your own retirement, all at the same time, and track your progress on every one, all in the same place. With all your savings goals built into your monthly spending plan, you can reach them all with confidence.