Much like getting enough sleep or drinking enough water, saving for the future is one of those things we all know we should do. But, just as we choose an extra hour with our iPad or another cup of coffee in lieu of what's best, many of us don't save as much — or as early, or as regularly — as we should.
Thankfully, there is a solution that has worked for me: Use milestone life events such as weddings, baby showers and graduations as financial milestones and opportunities to contribute toward your nest egg. You can even ask friends and family to help achieve goals by forgoing traditional gifts and asking for a gift of stock instead. Read on for three more ways to save, inspired by life stages.
- Graduations: Whether you’re graduating from high school, college or a graduate program, you are about to embark on the next chapter of your life. As you consider your next steps, there is no doubt that finances will play a role in your decisions. Some people rationalize waiting to save because of outstanding student loans or a smaller- than-expected first paycheck. But they’re wrong. Opening a savings account and setting achievable milestones will help you pay down those student loans and prepare you for unforeseen expenses. Kick-start your account with graduation checks from friends and family!
- Weddings: As you start to plan your future together, you are probably considering combining finances. Marriage is an ideal time to open a joint savings account. Choose a bank you are both comfortable with (perhaps one where you already have individual accounts). If your goal is saving, you can look for a high yield savings or investment account. Then, you should both commit to setting aside a portion of each paycheck and depositing it into your joint account.
- Baby Showers: Bottles and swaddle blankets are great, but they’re not all you should be thinking about. If you have a baby on the way, it’s a perfect time to set up a 529 account — an education savings plan operated by a state or educational institution. Designed to help families set aside funds to save for future college expenses, 529 accounts can also have some tax benefits. Often, the account grows federal- and state-income tax-free, and distributions for the beneficiary's college tuition are also exempt from federal taxes. The plans and benefits vary from state to state, so be sure to research and compare plans prior to investing.
If you put off saving, it will take you longer to achieve future goals. Use the tips above to celebrate with savings, and get started no matter what your life stage. Have another idea for life stage savings? Tell us your tips below!
Emily Washkowitz is a member of the DailyWorth Connect program. Read more about the program here.