One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—anything from a down payment for a house to a vacation—then figure out how long it might take you to save for it.
Here are some examples of short- and long-term goals:
Short-term (1–3 years)
• Emergency fund (3–9 months of living expenses, just in case)
• Down payment for a car
Long-term (4+ years)
• Your child’s education*
• Down payment on a home or a remodeling project
*If you’re saving for retirement or your child’s education, consider putting that money into an investment account such as an IRA or a 529 plan. While investments come with risks and can lose money, they also create the opportunity for compounded returns if you plan for an event far in advance. More details in step 6.