What are you saving for?
By Baillie Ward
What Are You Saving For?
This blog breaks down some of the most popular savings goals based on national research, with a few examples of the cost per goal.
Plenty of studies are released each year detailing what financial goals people strive to achieve. It’s one thing to know that 10% of Americans set aside money for vacation, but that’s a pretty vague thing to define. Where are you going? Is it a solo trip, or a family trip? This week, I decided to try and break down these savings goals to offer some perspective on how much money (on average) is needed to reach some of the more popular savings goals. Granted, some people may want to splurge while others skimp, so these numbers are flexible. I’ve made sure to include source links for the studies used to create this list, so take a look for yourself to check if your savings goals are in line with the rest of America.
55% of Gen Xers and Baby Boomers are saving to exit the workforce and retire, compared to 37% of millennials. All age groups set aside between 14-19% of the income annually, with millennials leading the pack as the best savers. Financial experts recommend that millennials saving upwards of $2 million for retirement, Gen Xers need an estimated $500,000, and Baby Boomers should set aside a similar amount, though they’ll have some extra help from Social Security.
A Nerdwallet study of American couples found that a little over 14.2% set aside money to plan for a vacation in the future. For some, a vacation could be just a trip to the closest beach or lake. Others may want to plan big, and take a trip across the pond with their family. I’ve compiled a list of the top three vacation spots in the States and abroad, with the average cost for a week-long couple’s getaway.
If you’re a fan of the DIY scene, you may be squirreling away funds to remodel a room in your house. Maybe you’d love a farmhouse sink in your kitchen, or you’d like to update your master bathroom. These projects can be expensive, especially if you bring in outside contractors- which is recommended if you’re not experienced in the categories of construction, electrical work, or plumbing. Here, I’ve composed a list of the average cost to remodel various rooms in a home:
41% of Americans report having a set fund for emergencies, but that fund may not be enough to cover truly unanticipated costs. The common rule of thumb for emergency savings is having either $1,000 or two weeks pay set aside, depending on which is greater. This should allow you a buffer in case unanticipated costs come up such as a health or home emergency. That way, those expenses don’t send you spiraling into credit card debt.
These are just a handful of savings goals shared by many Americans. As stated before, these numbers can change greatly based on how much you budget. For example, by taking advantage of free tourist attractions like museums or public parks, you can cut out the cost associated with admission fees or gift shops at tourist traps. You can choose to reallocate those funds to a nicer hotel or a lavish meal next to the National Gallery in London. The takeaway from all of this is to put these goals in perspective alongside what you’re currently saving and make changes where needed. Unfortunately, many people don’t know the true costs associated with some of these activities, particularly when it comes to remodeling or updating a home. To avoid dipping into necessary savings for monthly bills, try to budget more than you’ll actually need when working towards a savings goal. It’s better to have too much money set aside for something and have leftovers than not have enough.
Do these goals line up with your own? What are you saving for in 2017? Let us know!