The first thing to do is to identify and prioritize your goals. Then, set a dollar amount and a timeframe for each goal. The amount of time you have to achieve your goals can affect how you plan to save and invest.
If you’re saving for a major purchase within a year or 2, your focus will be on building your savings. You’ll want to keep your money protected and easily accessible.
If you’re putting money away for a long-term goal, such as your retirement or your child’s education, you may want to consider a broader range of investment types, including bonds and mutual funds. Keep in mind that some investments are complex and can be risky.
If you can, consider setting money aside for an emergency fund to pay for future unexpected expenses, like a home or car repair. Start by figuring out what you can put aside every week. Whether it’s $50, $20, $5 or some small change, the important thing is to start. Eventually, your goal should be to save the equivalent of 3 to 6 months of regular expenses.
When it’s truly an emergency, don’t hesitate to use your emergency fund. It’s much better than costly options such as credit card advances or payday loans. It will also help you manage your finances during challenging times and prevent financial stress.
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