Just like exercise and eating healthy can be good preventative measures for taking care of your physical health, establishing savings goals and priorities is key to taking care of your money fitness.
Setting aside money in savings should be a part of your monthly budget. However, not all savings are created equal. For that reason, it is suggested that you establish savings priorities to guide how you set aside your money.
When saving money three top saving priorities commonly recommend include the following:
Once you have created an emergency fund, and are making regular payments for retirement and to pay of loans and debts you can start to think about saving for other priorities. These priorities might include a big vacation, a new car, or saving for a down payment on a house.
As you save for each of these priorities you should create a separate fund or account where you keep your money for each of these goals. As you do this, investing can be an important tool for helping your money grow. More details on each of these types of savings priorities, and where to save or invest your money can be found in the sections in the tabs on the left.
How Should I Think About Investing?
Between smartphones, digital currency, and a plethora of investment apps like Robinhood, it is easier than ever to purchase stocks and investments as a young person. However, just because it is easy to buy and trade these individual stocks on a short term basis, that doesn't mean they are the best way to make long term investment gains. Whether you've inherited hundreds of thousands of dollars from your grandparents or if you're just a nearly broke 20 year old trying to save a little each month to purchase a car after graduation, research continually suggests that the best way for the average person to accrue wealth is to invest in passive funds for the long-term. That doesn't mean that there aren't some people who make it big using apps like Robinhood, or by investing in the newest digital currency--but if your primary goal is to invest in a way that will ensure the continual growth of your investments you're likely better off with a mixture of different saving accounts that earn you interest and some form of mutual fund or exchange traded fund (ETF).
If you're lost with all the vocabulary, check out the vocab page to the left, and then keep reading through the tabs on the left for more information.