How to Prioritize your Savings and Financial goals

While a significant part of building financial wellness is actively working to save money, it can get a little overwhelming when you try to save for so many things at one time. You may be saving for a new house or home renovation, while also saving for a new car and your child’s college education.

Deciding on your savings priorities is crucial to building your savings strategy and managing your overall financial picture. You should base your priorities on what you value in life and how you want your money to work for you. It’s easy to compare yourself to others, but when it comes to the way you build and achieve your financial goals, keep the Joneses out of it.

Before you begin prioritizing your savings goals, you must calculate the amount of money you can afford to put into savings. This is where your budget comes in. You have all those bills that must get paid, but it’s also important to remember that YOU deserve a line in your budget, too.

Read: How to budget and still stay sane

With that said, there are a few things that everyone should have on their savings list and keep in their budget.

Emergency savings

No matter what stage of life you’re in or how far along you are in your other savings goals, an emergency can strike at any time. You’ve been working hard to save for that house, that car or that wedding. It would be a real shame to have to spend what you’ve saved (and possibly more) on an unexpected and really costly emergency. The general rule of thumb is to save at least 3-6 months of expenses in your emergency fund. If that seems too overwhelming for you, set a dollar amount goal that will make you feel secure if financial hardship were to strike and start there. That’s priority number one.


For many people, an event that is somehow left off the priority list is retirement. A few reasons include:

  • It’s too far away to worry about now.
  • People have too many other “mandatory” bills to focus on.
  • Their employer does not offer a retirement plan benefit, like a 401(k).
  • There’s not enough understanding on how retirement plans work.
  • It’s already too late to start, and therefore it’s pointless.

Much like an emergency savings, your retirement savings’ purpose is to help you in the future. You can’t picture what emergency you’re saving for, just like you can’t picture your retirement, but saving for retirement should be a necessary part of your savings plan. The sooner you start saving for retirement, the better off you’ll be. Thanks to compounding interest, more time saving means more money earned. You know you’re going to get to retirement eventually. It’s wise to make the best of it as soon as you can.

If your employer offers a 401(k) plan, be sure you are taking advantage of this great benefit. Many financial advisors strongly recommend you contribute the full amount that your employer is willing to match, but you may not be able to afford that much. Start by contributing a smaller percentage, like 2%-4% and as your income increases, keep contributing just a little bit more until you reach that match amount, or even maximize the amount you are allowed to contribute. If your work does not offer a 401(k), look into opening an Individual Retirement Account (IRA) or Solo 401(k). More information on these kinds of retirement accounts is available here.


Next, let’s talk about debt. While saving money is very important, paying down debt, or even getting completely out of debt, can give you so much freedom when it comes to saving money. The interest rates you pay on most loan products will be higher than the rates you earn with a savings account. Throwing extra cash at your credit cards, student loans and your car payment will not only free up more of your money quicker, but it will actually help you pay less in interest, which will save you money in the end.

Read: Two ways to pay off your debt faster

Now for those “other savings goals”.

When your emergency savings and your retirement plan is all squared away, you can begin to focus on the “fun” goals, like that new house, a vacation, new furniture or the latest electronic device.

When prioritizing these goals, it’s important to look at two factors – time and need.

Looking at this from a visual perspective can really help. Make a list of four or five things you want to save up for, but in no special order. Now, consider when you need/want these goals accomplished and how much time you have to save up for them.

Reorder the list based on this information. This will help you determine which goals you want to prioritize over the others. Then, you can work to complete one goal at a time, which will keep the accomplishments rolling. Or, you can split the funds you’re allocating to savings amongst more than one at a time. It might take more time to accomplish each goal, but you have the satisfaction of knowing you’re always “funding your need”.  The way you actually tackle your savings goals is completely up to you, and only you can decide the way that’s best for you.

Let’s look at an example. In eight months, Jack and Rebecca (shout out to all the This is Us fans) will be getting married and going on their honeymoon. They currently share one car, so they would really love to get another car so they don’t have to rely on only one source of transportation. They are also hoping to purchase their first home in two years.

Here is their list in no special order:

  1. New house
  2. Wedding
  3. Honeymoon
  4. Car

The wedding and the honeymoon are coming up quickly, and they decide that they can live with one car for the time being. So, they plan to put all their saving energy to fund their wedding and their honeymoon. When they come back from their trip, they will focus on saving for a new car so that when they do have the house, they will also have two cars. After their second car is sitting in their driveway, they will then focus on saving for their new home. Since they need the most money for their house down payment, they also decide that any time they receive extra money, like bonuses at work, gifts, or their tax refund, they will put it toward their house fund, and that’s how they’ll save for their home while they also save for their other goals.

When it comes to prioritizing your savings goals, it really depends on what you value and how you want your hard-earned money to help you build the life you want. An emergency savings and retirement fund will help you secure your future, and paying down debt will help you free up cash to save even more.

How has your experience been with prioritizing your savings and financial goals? Do you have any tips, or even questions? Let us know in the comments below!

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