The start of a new year is a great time to think about your savings goals. But what should you save for?
Sometimes all you need is a little inspiration to help you imagine what your savings can
do for you. The ideas below can get your creative and financial gears turning to help
you set your own savings goals and save for each with gusto.
Your dream vacation
Maybe it's a big family reunion in a faraway country or a cross-country trek through the
national parks. A little web searching can help you establish a total budget for your trip.
Don't forget to include expenses like gas, airfare, food, and other in-trip spending when
you budget. A cash cushion can also help you take advantage of discounted airfares
and hotel rates when they come up without racking up credit card debt.
A new pet
If you envision a furry friend in your future, some savings can help cushion the impact a
new pet will have on your finances. The average annual cost ownership is $1,381 for a dog and $908 for cats,1 so make sure you establish a savings goal that goes beyond
just the adoption fees, and that you work the cost of pet care into your monthly budget.
Upgrading your phone
There's always a new bell or whistle in the world of phones. Creating a savings fund to
upgrade yours can open up several options. First, you could pay cash to avoid lengthy contracts and move easily from carrier to carrier. Next, you can take advantage of sales
on major sale days and save even more. To help set a goal, you can start at $580,2
which is the average cost of a new mobile phone.
A house down payment
It's never too early to start saving for a house down payment. To help create a savings
goal, aim for 10% the amount you intend to spend on a home purchase. That's the
minimum down payment most banks will accept for a conventional mortgages.
If you qualify, there are other mortgage programs -- such as USDA, FHA, and VA loans
--that offer lower down payment options (anywhere from zero to 5%). But even with a
lower down payment you'll still need savings to cover closing costs. The exact amount
of closing costs will depend on the purchase price of your home, the type of mortgage
you get, and where you buy your home.
Do a little research in your housing market, and then set up a recurring deposit to your
savings account to keep you moving towards your dreams of home.
Padding your emergency fund
Whether you already have one in place or want to start an emergency fund, there's no
such thing as too small an amount to seed your goals. To set your first goal, most
experts recommend three to six months of expenses3 as a starting point. From there,
carve out a bit each payday to get you on your way. Just think of what your emergency
fund will look like a year from now and rest easy knowing you'll have the cash on hand if
the unthinkable happens.
Home decor makeover
It doesn't have to cost a lot to give your favorite room a makeover. Whatever room you
want to spruce-up, make a list of your dream upgrades like throw pillows, shower
curtains, or even a fun chair, and then set a savings goal so you can indulge in a
shopping spree without the buyer's remorse.
Now you've got some inspiration to help you set savings goals unique to you. There's
no goal too small or big; all it takes is a dream to motivate your first step towards
Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
James McWhinney, "The Economics of Pet Ownership," Investopedia, updated October 12, 2020,
accessed October 26, 2020.
S. O'Dea, "Average price of smartphones in the United States from 2014 to 2024, by segment ," Statista,
published October 6, 2020, accessed October 26, 2020.
John Egan, "How Much Money Should You Have in Your Emergency Fund? " Experian, published April
18, 2020, accessed October 26, 2020.
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