3 Ways to Save Money for Your Family
When increasing your family’s savings, focus on your emergency fund, retirement fund, and short- and long-term savings goals.
What We'll Cover
- How to create an emergency savings fund
- How to set up a retirement account.
- What counts as short- and long-term savings goals.
Family life moves fast, and expenses add up even faster. Between shuttling kids to school and extracurricular activities, prepping dinner and helping with homework, it’s easy for financial planning to fall off the radar.
Knowing what your savings priorities are goes a long way in helping you feel more at ease with your finances. Whether it’s an unexpected injury on the playground or a sought-after family vacation, putting your efforts towards saving in these three areas will help you be prepared for life’s curveballs while ensuring that you and your family are living your best lives.
Here are 3 ways to save money for your family:
1. Build your emergency fund.
Family life is full of unexpected expenses, so your first savings priority for your family is to build up your emergency fund.
First, examine your monthly spending to see where your money is going. Do you need to cut any non-essential expenses – one less takeout night per week or pausing a streaming service – to contribute to your emergency fund?
Next, start small. Set a goal to save $1,000 to use for smaller expenses that pop up unexpectedly, like vehicle or home repairs.
Then, go bigger. Work toward building a rainy-day fund that covers 3 to 6 months’ worth of essential living expenses. The rainy-day fund will cover costs such as:
Mortgage or Rent Payment
Add up your total expenses and multiply the sum by the number of months you plan to save for. For example, if your essential spending is $2,500 each month, you’ll need a minimum of $7,500 in savings to cover 3 months of expenses.
# of Months
Minimum in Savings
Having an emergency fund in place can save you from going deep into debt when something unexpected happens.
2. Build your retirement fund.
Your next priority in saving money for your family is to focus on your retirement fund. If you want to set your kids up for success, make sure they don’t have to worry knowing you’re financially set after leaving the workforce.
Prioritizing retirement paves your way to financial independence in the future and allows your money to grow immediately. Even small contributions will help you reap the benefits of time and compound interest if you start building your retirement fund sooner rather than later. If your retirement investments return earnings each month or year, those earnings accumulate and earn more on top of them.
Set up a retirement account. If you’re not already set up with a retirement account like a 401(k), it’s time to get started. Many employers offer 401(k) accounts and match a certain percentage of your contributions. Check with your employer’s HR department to see whether they match and if so, how much. That’s free money you don’t want to leave on the table!
3. Build your short- and long-term expense funds.
Finally, once your emergency fund is established and your retirement account is growing, it’s time to focus on saving for the fun stuff. This last saving strategy is all about determining what brings joy to your family and feeling good about spending money on the things you love to do together.
First, look at the short-term savings goals. These should generally take you less than 12 months to achieve. Short-term expenses might cover things like:
Installing a Swimming Pool
Buying a New Jet Ski!
Then, think long term. What is on your family’s wish list? Leap into your family’s long-term aspirations and start saving for those big-ticket purchases.
Whether it’s a car for your teenager, a bigger home for your growing family or funding your children’s college tuition – take the opportunity to map out any remaining savings or investment goals where your money can grow and have the impact you’ve long hoped for.
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- Your first savings priority for your family is to build up your emergency fund.
- Prioritizing retirement paves your way to financial independence in the future and allows your money to grow immediately.
- Short-term savings goals – like family vacations, home renovations or installing a swimming pool – should generally take less than 12 months to achieve.
Lessen the mental load of financial planning by keeping these 3 priorities in mind when saving money for your family. This way, you can be fully present in your day-to-day routine knowing that your money is going to work for you behind the scenes.
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APR = Annual Percentage Rate