How to Prioritize Savings To Meet Your Financial Goals

There’s a Jamaican proverb that says, “Save money, and one day money might just save you.” Valuable advice. It’s necessary to save some of what you earn for the future because you’ll need the money down the line. 

But, as you look to start saving, there are so many different goals and personal priorities that each will take money. It can be hard to know which one to choose or how to prioritize your savings to get the most out of your money. 

Should you save for retirement first? Build an emergency fund? Set money aside for a trip or your child’s education? Each of these goals can seem pressing, and you may not be sure where to start. 

The good news is there are guidelines you can follow to set yourself up for financial success and security as you go through life. Let’s look at how to prioritize your savings to be sure you’re reaching your goals, and you’re protected from the unexpected.

Start Building Your Emergency Fund

According to the 2022 Wealth and Wellness Index by Personal Capital, 53% of Americans can cover an unexpected $500 expense without worry. While this is good, it also means 47% of Americans can’t cover a $500 emergency expense without worry. 

One thing we know about life is emergencies and the unexpected happen. So, as you work to prioritize your savings, it is important to think about these emergencies and how they might affect your bottom line. 

Your first priority when saving should be to start building an emergency fund. 

Often the advice you’ll see is that your emergency fund should be equal to three months of your living expenses. But if you’re just starting out, this can feel overwhelming. So, when you start to build your emergency fund, it’s helpful to start with a more realistic and achievable goal. 


Work to build your emergency fund first to $500 and then to $1,000. While these amounts won’t cover every emergency, they will help you be more prepared for what life throws your way. 

Having an emergency fund is essential. It gives your budget some insulation from the unexpected. It can also make emergencies feel a little less dire because you have some money to fall back on. Once you’ve built your emergency fund to $1,000, you can start to look toward other savings goals that will help you build financial security. 

Contribute to Your Employer-Sponsored Retirement Plan

After you’ve started your emergency fund, even as you continue to grow it, the next savings goal you should focus on is your retirement. 

The best place to start with this goal is your employer-sponsored retirement plan if you have access to one. This will allow your contributions to be automatically deducted from your salary before you’re paid. 

This forced savings helps take the tasks of remembering to save or finding money to save out of your hands and ensures you will do it. 

The other draw to funding your employer-sponsored retirement account is that employers will often offer matching contributions. This means if you put your money into your retirement account, they will match some of the funds and help your retirement grow even faster. 

To get started, speak with HR. Be sure when you sign up and decide how much you’d like to contribute that you’re contributing at least enough to get the full amount of your employer match.

Pay Off High-Interest Debt

Next, as you’re prioritizing your savings, it’s important to free up money in your budget to go toward your savings goals. 

One of the best ways to find this money is by paying off your high-interest debt. 

Paying off this debt is helpful in two ways. 

  1. Once the debt is paid off, the money you were using to make those payments each month can now be saved. 
  2. Your high-interest debt is costing you more in monthly interest payments than you’ll earn in a savings account. This means holding onto this debt over time is expensive. By eliminating this debt as quickly as you can, you’ll save money on interest. Typically, debts like credit card debt have higher interest rates ranging from 20% to 24% or even higher. This is higher than the return you’re likely to see on investments and savings. So, paying these debts quickly will save you money and allow you to start prioritizing your other goals.

Continue to Grow Your Emergency Fund and Save for Other Goals

How do you know when you’re ready to add new savings goals?

Once you’ve started contributing to your employer-sponsored retirement plan, paid off your high-interest debt, and have emergency savings to cover at least one month of living expenses, you can start thinking about other savings goals. 

Note: It’s still recommended that you continue to build your emergency fund. Remember, you’ll eventually want three months of living expenses in the account (some people even aim for six months if their situation is complex). 

How do you pick new savings goals?

These goals could include things like saving for a house, a car, a vacation, or your child’s education. 

As you start saving for other goals, knowing how to prioritize them can be tough. It’s helpful to look at the time horizon for each goal (when you’ll need the money), and how much money you’ll need.  

Goals you’re hoping to reach sooner will likely need a larger contribution to help you make them a reality. 

Make a list in Excel, Google Sheets, or a notebook where you can prioritize your goals and track your progress. 

To figure out roughly how much to save, divide the total you’ll need by the number of times you’ll get paid before you reach your goal. This will give you how much you need to set aside each paycheck to reach your goal on time.

Where to Save

As you start saving, it’s helpful to know where you should be putting your money to help it earn interest but to still have it accessible when you need it.

For your emergency fund and any shorter-term goals, you have (typically less than a year) a High Yield Savings Account (HYSA) can help your money earn interest while giving you access to your money quickly if you need it. To find a HYSA you like and that meets your needs, compare the different options online. As always, be sure to understand the requirements and terms of the account. 

For your longer-term goals, you may want to consider an investment account. Investment accounts are helpful for things like retirement and college savings because they can help your money grow faster in specialized accounts. But investment accounts can also be helpful for goals with a longer time horizon. This is because your money will be in the market and hopefully will be growing more quickly.

It’s important to note with investment accounts, you can encounter fees and tax consequences when you sell your investments to access your money. This shouldn’t deter you from investing, but it’s something to be sure you understand as you invest money toward your goals. Also, remember returns in the market are not guaranteed. This is why for your emergency fund and shorter-term goals, investment accounts are often not the right choice. It also means you need to be aware of the potential for loss and understand how it could affect your financial situation.

How Many Goals Should You Have at One Time?

Once your emergency fund is built and you’re saving for retirement, it can be hard to know what to save for next because so many goals and opportunities are calling your name. 

This is when prioritizing your goals based on time horizon, and your own personal values is so important. 

It can be helpful to write down all your different financial goals and then consider when you want to achieve each and which ones are most important to you or your family. 

Having too many savings goals at once can be difficult because you may not see much progress on any of them. Instead, pick one or two that matter most to you or are coming up quickly and prioritize them first. 

Once you’ve reached them, you can move on and add additional goals from your list.

It’s important to understand how best to prioritize your saving goals. You have a finite amount of resources, and you want to make them work for you in the best possible way.