Saving for Major Milestones
Major milestones — events that mark a turning point in your life — often require additional expenses or signify a change in your financial circumstances. To avoid any issues, you should anticipate how milestones will impact your bottom line and create a plan to deal with those additional costs. In fact, saving for major milestones is a sound strategy to include in your overall financial planning.
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Major milestones — events that mark a turning point in your life — often require additional expenses or signify a change in your financial circumstances. To avoid any issues, you should anticipate how milestones will impact your bottom line and create a plan to deal with those additional costs. In fact, saving for major milestones is a sound strategy to include in your overall financial planning.
3 Ways to Save for Major Milestones :
1. List Your Major Milestones
Envision your future and create a list of the specific milestones that will impact you and your family. Typical milestone events include:
- Buying a car
- Graduations
- Higher education
- Getting married
- Starting a family
- Buying a home
- Retirement
- Special anniversaries or birthdays
2. Assign a Budget and Timeline to Each Milestone
Look over your list and prioritize each milestone by date and importance. Assign a budget to each one. For example, if your child is in kindergarten, you have 12 more years before they graduate. Now, determine how much you will pay towards post-high school education, such as college or trade school.
3. Determine Specific Financial Strategies
To achieve your goals, you may rely on different financial strategies depending on how much money is needed for each event and when you will need it. Some long-term events, such as retirement or your child’s college attendance, may involve setting up specialized savings accounts such as IRAs for retirement or enrolling in a 529 plan to pay for a college education. Planning for shorter-term events, such as a special birthday or trip, could mean using a traditional savings or other interest-bearing account that provides easier access to your money.
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