For many, an emergency fund is a great way to begin your savings journey. It’s a catch-all in case something unexpected occurs with your home, health or vehicle. Whatever stage of life you’re in, from your college days to your retirement years, a savings fund offers ease of mind as you go about your life.
But what happens when you’ve completed your emergency fund? Once that goal you’ve worked toward for months or years is complete, where should you allocate extra money in your budget? (Spoiler alert: The answer isn’t a shopping spree!)
If your rainy day fund is filled to the brim, here’s a quick guide of movies you can make to keep your financial goals on track.
Double-Check: How Much Should Your Emergency Fund Really Have?
First, it’s important to double-check that your emergency fund really is complete. It’s easy to underestimate how much you’ll need in case of a job loss or other unexpected event.
It’s also worth keeping in mind that if your family has grown in recent years, your emergency fund should also grow to keep up with those extra costs. An emergency fund for a single bachelor in rural Oklahoma should look very different from the emergency fund of a New York-based family man with six kids.
Calculate Your Costs
To figure out your target emergency fund, calculate how much money you and your family would need to survive each month. This amount should include all essential expenses, like food, transportation and mortgage or rent payments.
Next, multiply that number by six months. This should give you (hopefully) enough time to recover or find a new income stream in the event of an emergency.
If your emergency fund is on par or above that number, congratulations! You’ve successfully saved up a solid emergency fund.
5 Financial Moves to Make After Your Emergency Fund is Complete
Capping off your emergency fund is a great milestone – especially if you consider that only 47% of Americans have $500 socked away for unexpected expenses.
But one of the best ways to stay financially healthy is to have goals. If you’re looking for a new money hurdle to tackle, these five financial moves can get you headed in the right direction.
1. Say Goodbye to Debt
If you haven’t tackled your debt already, there’s no time like the present. Interest on debt compounds over time, so the sooner you can pay off the principal amount, the better.
Whether it’s student loans, medical debt, credit card balances, or car payments, clearing out your debts can help you stay on track for your other financial goals.
2. Invest for Your Future Self
Another great goal to keep on your radar? Retirement.
Although it may seem like a long ways off, you’ll have several costs to cover in retirement. And with inflation trending upward over time, those costs will likely grow more expensive in years to come.
The sooner you begin investing in your retirement account, the longer it will have to grow and accumulate funds.
- When do you want to retire?
- What do you want to do in your golden years?
- How much can you afford to save right now?
- How much risk are you comfortable taking?
Retirement grows closer every single day, so don’t wait to start saving for this important financial goal!
3. Work on Your Credit
Your credit score can impact many big moments in your life: purchasing your first home, refinancing your car or even sending your children to college. Whenever you need to borrow money, your credit score will likely come into play.
If you are anticipating any of those events in the next few years , now would be a good time to start working on increasing your score.
4. Purchase a Home
Did you know that over 80% of millennials wish to own at least one home in their lifetime?
And for good reason – homes offer a host of benefits. From total control of your interior design to a great investment opportunity, homes are generally a great long-term purchase.
Of course, there are several factors you should consider before jumping into a mortgage, like your family plans and job security.
5. Save for Your Child’s Education
If you have young children or are thinking about starting a family sometime soon, the ol’ college talk could be coming back sooner than you think – and it’s probably worse than you remember.
As of 2021, the average debt tied to a bachelor’s degree at a public university was over $28,000. That’s not the total cost – just the amount that students couldn’t otherwise cover via scholarships, family help or other means.
If college could be on the table for you or your child in the future, it’s a great idea to start saving now.
An emergency fund is a great financial goal – but it shouldn’t be the only thing you’re working toward. If you’re looking for a new savings goal to inspire your spending habits, these five financial moves are a great place to start.
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