4 steps to prioritize savings goals

Financial advisors can help you figure out where to save your money. Different banks' services and digital tools can help you set up how to do it.

But why are you saving in the first place? This is a question that only you can answer, based on your own goals and whether you want to meet them sooner or later.

If your priority is to start working toward a long-term savings goal that you'll benefit from in the future, your savings plan will be different from a short-term goal's.

What's a short-term financial goal versus a long-term goal?

Generally speaking, anything you'll need funds for in more than five years' time could be considered a long-term savings goal. Examples may include retirement, a child's future college tuition or someday acquiring land to build your dream home.

A short-term financial goal might include saving for things you'll need or want in less than five years' time like a wedding, a home renovation project or a family vacation.

How to prioritize savings goals

Taking these four actions now can help you achieve your savings goals.

1. Establish a plan for your savings goals.

Make a list of your savings goals and be as specific as possible: "Family vacation for next summer" or "Retirement in 2040." This helps attach the goal to what's important to you, so you can keep your eye on the end result. Once you've made a list, determine what are short-term financial goals versus longer-term goals. This is important because your timeframe plays a role in what type of savings vehicle you should consider. You'll also want to determine how much you need to save to meet your savings goals within the specified timeframe.

2. Review your spending plan.

It's one thing to know how much you need to save to meet your savings goals, it's another to know how much you can afford to save. Review your spending plan to see what you can start saving today and look for opportunities to cut back, so you can increase your savings over time. Don't have a spending plan? USAA offers resources that can help you see how you allocate your income and expenses, like a simple budget worksheet (Opens in New Window) and other free online budgeting tools. Use that information to create a savings plan specific to your savings goals. Talk to a financial advisor if you need help creating a plan.

3. Consider building some savings before paying extra on debt.

This is always a fun but controversial topic since the math may tell you to do the opposite. But unexpected things do happen, and they can be expensive. You don't want to have to dip into your long-term savings or take on more debt if you can help it. Help protect the funds designated for your future by saving first for emergencies.

Take your income and expenses into consideration when deciding how much you should save in an emergency fund. A general rule of thumb is to save at least $1,000 before paying above the minimum required payments on your debts — and eventually enough to cover between three and six months of your necessary expenses. With this socked away, you may be able to avoid applying for a loan or charging your credit card to cover an emergency — two actions that will add to the amount of debt you owe and make it harder to save for your goals.

If you do need to use some or all of your emergency fund, try building it back up again as soon as possible.

4. Pay down debt.

Debt with interest can easily obstruct your path to saving. Say your credit card has a high interest rate and you pay the monthly minimum while regularly using the card to make purchases. After paying the minimum, the interest charged against the remaining — and ever-increasing — balance can quickly exceed the amount you spent on your purchases in the first place.

In this case, once you have at least a $1,000 set aside for emergencies, it may be more beneficial to redirect some of your monthly savings to make above-minimum payments. This will help reduce that growing interest amount, which means you're saving money.

At the end of the day, the order in which you prioritize your savings goals is personal and up to you. But having some foundational items like a spending plan and an emergency fund in place can help you handle unexpected expenses along the way.

How to stay on track with your savings goals

The best way to stick to saving is to make it as easy for yourself as possible. If you're often tempted to spend, automation might be your best friend. Different financial institutions offer different account features and digital tools and services that can help. Some methods include direct deposits from your employer and recurring transfers from checking to savings accounts.

Next are common sense methods that may be more difficult because they often require modifying your habits. The results can add up quickly to help you reach your goals:

• Spend less, even if it's just a few bucks here and there: Go to the movies during matinees when ticket prices are cheaper, order a smaller size drink at the coffee shop, bring your lunch to work a couple of days each week.
• Stop spending where you don't need to: Cancel memberships and subscriptions that you don't use, remove shopping apps from your devices if you find them too tempting.
• Stay consistent, even when it's hard: Eventually your new habits will become second nature and you'll see the rewards reflected in your savings balance.

The most important things to remember as you're taking steps toward your savings goals are, first, it may take a while to see the fruits of your labor, especially for longer-term goals. But don't let that discourage you. Second, it's not natural for most of us to set money aside versus consuming what we make. Delayed gratitude can be difficult, but the whole point of planning is that you'll be able to enjoy it — in all the ways you've envisioned — when the time comes.

The USAA Advice Center provides general advice, tools and resources to guide your journey. Content may mention products, features or services that USAA Federal Savings Bank does not offer. The information contained is provided for informational purposes only and is not intended to represent any endorsement, expressed or implied, by USAA or any affiliates. All information provided is subject to change without notice.