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How to Juggle Multiple Savings Goals

By Melissa Green | Citizens Bank Staff

Financial planning can be tough for anyone to wrap their head around. You're paying down student loans, your car needs repairs, and you're dreaming of home ownership — but you also really want to take a vacation. It’s easy to get overwhelmed when you’re living your best life and planning for your future at the same time.

Most of us will always have savings goals that concurrently compete for a place in our budget. You can reduce the stress it can cause by developing a savings plan. Read on to learn some tips to save for multiple goals at the same time.

Set specific financial goals

It’s time to get specific about what you’re saving for. The old adage “it’s not a goal until you write it down” is not only motivating — it also helps you get organized. Specifying your savings goals will help you prioritize, track your progress, and keep you accountable. Whether you open up a new Excel document or construct a vision board, make sure your specific goals are written down. You’ll need both the goal and the amount you’ll have to save.

Establish a timeline

Now that you know what you’re saving for and how much you’ll need, it’s time to determine how long reaching each goal will take. Timing is a key component of any practical savings plan. Depending on the timing of your goals, you’ll need a different plan based on things like risk and return on investment.

Some of your goals will have a simple timeline, like the vacation you’re planning a year from now. Other long-term goals, like your retirement, can be harder to nail down. To simplify, you can set benchmarks or smaller goals, like saving $50,000 by age 30.

RELATED: How to Plan for Short and Long-Term Savings Goals

Set monthly goals

Since you’ve established when you want to accomplish each goal, it should be simple to calculate how much you need to save each month to meet your deadline. You may need to do some refiguring based on your savings potential and your monthly budget. That’s okay; you want to make sure your plan is feasible and realistic.

Establish a savings strategy

Prioritization is key when you’re balancing multiple savings goals. Decide which goals are the most important and which can wait so that you allocate your savings effectively. For example, you can spread out the money you save monthly toward each goal evenly, or you can allot a larger amount to a particular goal in order to reach it faster.

When it comes to prioritization, there’s no wrong answer — the best choice for you will depend on what you value most. For example, one couple might prioritize maxing out their 401(k) before saving for a vacation home, while another couple might do the opposite. Your current circumstances and future plans will help you determine your list of priorities.

Choose the right savings tools

Now that you have a plan in mind, you’ll want to choose the right saving tools for your goals. If you’ve had the same savings account since you were a teenager, you’re probably not making the most out of your money. You don’t have to stick to one savings account; in fact, multiple accounts can be a great way to organize your different savings goals.

Saving tools go beyond simple savings accounts. Below are a few options that you can use to reach your goals, as well as some links for more information.

  • Savings account: A safe option to earn interest with minimal risk, although the interest rate is usually somewhat low compared to other interest-earning financial tools. Most are FDIC insured and allow you to withdraw funds at any time.
  • Money market account: A lower-risk option, this high-interest deposit account could grow your money more quickly while avoiding unsecured market investments. Some additional benefits include easy access to your money, limited check writing ability, stability, and FDIC insurance.

RELATED: What is a Money Market Account?

  • High-interest or high-yield savings or checking accounts: Interest rates are typically higher than money market accounts generally offered by online banks and credit unions. They often come with certain financial criteria that may include a high balance and required monthly direct deposits.
  • Certificate of deposit (CD): If you’re looking for a “set it and forget it” option, a CD will give you a consistent rate of interest that’s higher than a standard savings or high-interest checking account. You need to be willing to commit those funds through the CD’s maturity date, typically anywhere from three months to five years.

RELATED: How Can a CD Help My Financial Plan?

  • Savings bonds: Similar to CDs, savings bonds are another low-risk and long-term investment backed by the government and available in denominations ranging from $25 to $10,000. It’s important note that savings bonds won’t reach their face value until they mature, typically either 20 or 30 years from issue date.

RELATED: What is a Savings Bond?

  • IRA: An individual retirement account (IRA) is designed specifically for retirement savings. Unlike other accounts, IRAs offer certain tax advantages and are FDIC insured. There are two basic types of self-directed IRAs: traditional and Roth. Both have contribution limits but different benefits based on your situation. Often there are early withdrawal penalties.

CALCULATE IT: Is a Traditional or Roth IRA Best for You?

  • 401(k): A 401(k) is a retirement savings plan offered by your employer. Funds are withdrawn pre-tax from your paycheck and invested on your behalf. Companies may match any contributions you make; often, it’s some percentage of your salary. Taxes are deferred until you start to make withdrawals, typically after the age of 59. As with IRAs, early withdrawal penalties may apply.

RELATED: IRA vs. 401(k): Which Is Right for You?

Every savings strategy or tool has its pros and cons. Before you make a decision, talk to an experienced financial advisor to help you make the best choices for your unique situation.

Ready to tackle your financial goals?

When you have multiple goals to save for, you don’t have to feel overwhelmed. Planning and prioritization can make you ready to reach them all. Let us help you find the light at the end of the tunnel.

Stop by your nearest Citizens Bank branch to speak with a banker who can help create a savings plan that’s right for you.

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