Saving is an essential part of any personal finance plan. Having money set aside can help you face financial challenges and pay for major expenses. But saving is tough, especially if don’t have a well-defined goal.

Take a few minutes to define your savings goals. Doing so will help you make better decisions with your money along the way. To help, we’ve listed some common savings goals and a few strategies to get you started.

Your #1 Savings Goal: An Emergency Fund

An emergency fund should be your number one savings goal. It can give you room to breathe when unexpected expenses arise. Starting an emergency fund is an important step towards financial stability.

Initially, aim to save $1000. Don’t touch this money unless there’s a real emergency! If you can get to $1000, saving more is only a matter of time.

Continue to build on your initial $1000. The end goal is to save 3 - 6 months’ worth of your total monthly expenses. This amount of money will cover you when you get in a car accident, need a minor surgery or even lose your job.

With a good emergency fund, most mishaps become just a bump in the road. Instead of worrying and going into debt, you’ll pay out-of-pocket, say “ouch” and move on with your life.

Other Common Savings Goals

• Retirement. The sooner you start saving for retirement the better. The money you save now will be your source of cash when you’re no longer working. Take care of future you and start saving!
• Down payment for a home. If you want to buy a home, you’ll likely need 3 - 20% of the purchase price as a down payment.
• Vacations and luxury items. There’s nothing wrong with responsibly spending money on things you want. Saving over time will allow you to make large purchases without feeling guilty or hurting your cash flow.
• College fund. There are many tax-advantaged accounts available for college funds, meaning you can lower your tax obligations by contributing to them. This benefits you and whoever the account is for.
• Cars. Buying a car outright will cost you less in the long run. If you take out a loan to buy a car, you will pay the sticker price plus interest. Avoid this by saving money first and then paying for your car out-of-pocket.

Strategies for Saving

Once you’re crystal clear on what you’re saving for, develop a savings plan. Here are some strategies to help you get started.

• Just start, even with a small amount. It’s easy to feel overwhelmed by the price of college tuition or a down payment and never begin saving. But even starting with just $10 or $20 every payday is enough to build momentum. As you watch your money grow, you’ll likely feel more motivated to keep going.
• Pay yourself first. When get you paid, immediately transfer money to your savings account. Then decide what to do with the rest of your money (instead of the other way around). Set up automatic transfers in Horizon’s online banking to make saving simple and easy.
• Choose a percentage of your income to save, not a dollar amount. This is especially helpful if you have inconsistent income. For example, you might save 15% of your income for retirement and 6% for a new car. This helps you be consistent and avoid feeling like you’re not saving enough.
• Write savings into your monthly budget. It’s important to create a monthly budget. Just like food or gas, make savings a line item on your budget and prioritize it. Saving “whatever’s left” is not an effective strategy.
• Use a budgeting app. Don’t be intimated by your money. Budgeting apps make money management easier than ever. Use Horizon’s budgeting app to set savings goals and watch your money grow.
• Save money in an interest-earning account. Make your money work for you by investing it in an interest-earning account such as a Certificate of Deposit (CD) or money market fund. You can also open Summit Checking account or Tether Savings accounts to earn money on the cash you use every day.

If you're not sure where to start, we're here to help. Stop by your local branch or give us a call at 800.852.5316.