Tips for Saving for a Major Life Event
Our lives are filled with major events, such as marriage, buying a home, growing your family and reaching retirement. It may seem difficult to build savings for these larger expenses, but it is possible and can be so simple. Here are some tips on saving for a major life event:
Plan Ahead for Major Expenses
Many of life’s most significant events allow you to plan for them ahead of time. This allows you to also plan ahead for the expenses that come with the event. For example, couples typically get engaged before they get married. And, many people spend months looking for a home and building up their savings before putting an offer on a house. When possible, the first and foremost step is to determine what you’ll need to start saving. Costs vary for each major life event, and it’s important to know what you’re in for and what to expect. Consider some of the following points:
- Estimate your expenses and set a savings goal – Research the average amount of savings people typically need for each event. For example, in 2017 the average U.S. wedding cost $33,391, and the average cost of having a baby was $10,808.
- Determine how much time you have to save – If you’re saving for a dream home, you may have 10 years, or it could be 10 months if you’re about to start your family. Determining how much time you have to save will help you know how much to put away each pay period.
- Create a monthly schedule – Having an overall plan for adding to your savings fund, and calculating an amount to add at each pay period will ensure you’re on track with your savings.
- Establish a separate savings account for each event – Many people find it helpful to set up a separate account and automatic deposits to that account each time they get paid. This helps prevent you from spending the money you’ve already set aside.
- Include savings amounts in your budget – One of the best ways to stick to your savings goal is to treat your savings like all your other regular financial obligations—as a priority and a commitment to your future endeavors.
Sometimes you can’t plan for a major life event. You never know when your car might break down, experience health concerns or any number of emergencies. For these situations, it’s a good idea to have an established emergency fund. Check out our tips for building your emergency fund.
Cut Out Small Expenses and Create a Budget
Saving doesn’t have to be a challenge. Eliminating minor and often unnecessary expenses can save you a lot of money in a short amount of time—and creating a budget can help you stay on track while saving. Check out our other budgeting and saving resources:
- How to build a budget
- How to manage your budget
- How to save more each month
- Seven more easy ways to save money
Plan Your Savings with Our Calculators
Want to start saving for your next big milestone? Use our Save Towards a Goal calculator to start planning.