Ever since my parents started paying me $5 a week to clean the bathroom and dust, I’ve been a saver. As someone who always followed the “rules,” it’s simply part of my DNA. But I recently realized that while I’ve been socking away cash for decades now, I don’t actually really know what I’m saving for — which gave me some anxiety. I knew that a few of my future goals, like saving for a wedding, would be a bit pricey, but I had no idea if I was saving enough to pay for them.
I have an IRA account for retirement, and a general savings account with enough in it to cover any emergencies. But none of my savings is earmarked as “emergency” or “wedding” or “vacation” or anything else I assume will happen in the future. I deposit money… when I think about it. And while I know that some milestones on the horizon are going to be expensive — a wedding, kids — I have no idea how much I should be saving for those things (or if I should even be saving for them at all) at this point in my “single but in the early stages of a relationship” life.
So I asked the pros. “Most people inherently know they should be saving, but there’s a big mystery around the specifics, like how much, where, and what happens if they have to dip into those savings,” financial planner Shannah Compton Game, CFP, the host of Millennial Money podcast, told me. “You feel like you should be hitting certain financial milestones at certain ages, but there is no timeline. Instead, it’s about creating the vision you want for your life and then figuring out how to get your money to support that vision.”
And that picture doesn’t have to be crystal clear for you to start saving for it, now. Here’s how to strategize when your future doesn’t quite have a timeline.
Don’t neglect the basics
Certified financial planners (CFPs) stress that you shouldn’t worry about big life expenses until you sock away an emergency fund of at least three months’ expenses, pay off any debt you may have, make sure you’re getting your employer’s match for your 401k (if it’s offered), and max out the contribution to your company plan and an IRA. Being self-employed, I have six months of emergency funds in savings so I have a bigger cushion, if necessary, and I contribute to my Roth IRA and just set up a SEP IRA. So my bases are covered.
Know what you’re saving for
Think about the specific goals you have for your life, and what you’ll need to save to get there, says Compton Game. For me, that’s a small destination wedding with a bigger party back home, having one or two kids, and owning a house. Being able to picture these things will help you stay committed to saving, rather than losing interest a few months down the road.