One of the best goals you can make for your financial life is to save more. More savings can do a lot for you: create more security and provide more opportunities. And more savings – if invested properly – can lead to the creation of income-producing assets, setting you and your family up for a lifetime of financial success.
Each year I jot down a list of cool things to save up for – our personal savings goals – and share them here with you. This helps to hold me accountable. It also allows you to learn from our approach – and hopefully be inspired by what’s possible.
Good things to save up for:
So what should you be saving for? Well, that’s entirely up to you. That’s the beauty of saving money. You’re in control. You get to decide what’s important.
Ideally, you should be saving money according to your values. What’s important for you and your family?
- Do you want to purchase something significant, like a house, car, or boat?
- Do you want to reach financial independence? Or retire?
- Do you want to save up a fund that will allow you to leave your job and become self-employed full-time?
- Do you want to pay for your kid’s college education?
- Do you want to be able to handle life’s little emergencies as they arise without going into debt?
These are all great things to save for. But you need to determine what’s important to you. Take some time to think about what you want and write it all down somewhere.
If you’re married, it’s a good practice to set goals with your spouse to ensure your goals are aligned. Come up with a list independent of your spouse though. Then come together to create a joint list you can be happy with.
Related: New Personal Finance App for Couples: Our Zeta Review
My last thought here is that everyone likely should be saving something for their retirement.
Even if you don’t have any other savings goals, you should consider your post-employment needs. This is the time when you’d likely become a burden on society or your family if you can’t afford to live without earning income.
It’s selfish in my view to avoid any kind of retirement savings.
How much should you save?
You should save as much as you want to save. Again, this has to do with your personal values and choices. Some people save as much as 80% of their income. Others choose to save 5%.
Obviously, the more you save, the faster you will get to your goals. So if you’re looking to fast track your efforts, then a significant savings rate is probably in order.