Tips to Save for 5 Key Milestones in Life

As we get older, our priorities change. Some of the most significant milestones in life—like getting married, graduating from college, having kids or buying a house—impact where and how we save and spend money.

Preparing financially for major life milestones helps relieve financial stress, so you can focus on celebrating these significant life events. Here are some tips to help you build your savings and prepare for five major life events.

1. Getting to Debt-Free

If you've recently graduated from college or bought a new car, chances are you have some debt. Perhaps you're carrying a credit card balance. While there are many reasons to have debt, reducing your debt can help free up your money and allow you to funnel it toward other financial goals. Here are some suggestions for how to save and become debt-free:

• Double up on debt payments. If you can afford it, make an extra debt payment every month. This can decrease the amount of money (or "principal") you have to pay off and help you pay off the debt faster. 
• Take the “avalanche" approach. Continue to make the minimum payments on all debts, but prioritize aggressively paying off the debt with the highest interest rate first (like your credit card) to save on the amount of interest you'll have to pay.
• Consider using the “snowball method." Continue to make the minimum payments on all your debts, but prioritize wiping out the debt with the smallest balance first. Once that's gone, use the freed-up amount to help you aggressively pay down the next balance, until you work your way up to your largest loan. This method can help build momentum and motivate you to become debt-free.
• See if consolidating your loans makes sense. Condensing your loans into one new loan might save you money, especially if you snag a lower interest rate. 

2. Building a Family 

Whether it's just you and your partner or you have a whole brood of kids, having a family can impact your finances. You may consider saving for a wedding, buying your first home or planning trips throughout the year to visit family members. Here are some ways to get financially ready to have a family:

• Check your health insurance to see what type of coverage you have. Having a baby can be expensive. If you qualify, consider setting up a health savings account to prepare for any family medical expenses. 
• Get life insurance. Health insurance isn't the only type of insurance you should look into when it comes time to expand your family. Life insurance can help ensure your family is financially secure if you pass away.
• Set aside at least 10% of your paycheck into a savings account. Whether you're planning a wedding or saving for a down payment on a house, having a high yield savings account can help you reach your goals faster. 
• Create an emergency fund. In addition to saving for specific big-ticket items like a house or a car, consider saving at least three to six months of living expenses. This can help you in the case of an unexpected expense or job loss. And keeping your emergency fund in a high yield savings account can help your savings grow risk-free.
• Make an estate plan. Having a will in place can help protect your family. Think about how your family's assets will be divided or who you want to name as the guardian of your children if something happens to you. While it can be a difficult conversation to have, having your finances and paperwork in order can help make things easier in the future. 

3. Saving for Your Kids' Future

While your kids will always be your babies, they probably won't live in your house forever. Eventually, they'll grow up and maybe go to college or trade school, or start their career. Here are some ways you can build wealth for your children's future:

• Open a savings account for your kid. A savings account can help kids save for their future and teach them valuable financial skills like budgeting. With a children's savings account, you and your child can access their funds.
• Consider opening a custodial account. The money is held in the child's name, but as the parent or guardian, you can deposit funds into the account. Unlike a joint savings account, only you will have access to the account until your child comes of age. 
• Set up a 529 plan to save for your kids' education. A 529 plan has many tax benefits. You can open a general college savings plan that can also be used for private K-12 education, or you can open a prepaid tuition plan to lock in current tuition rates at public schools.¹
• If you have a child with a disability, consider setting up an ABLE account. The money in these accounts can grow tax-free and be withdrawn for qualified expenses. Plus, they don't count against government assistance.²

4. Becoming an Empty Nester

Before you know it, the kids have packed their bags and you suddenly have a much quieter home. You might find yourself with time to do all the things you've been putting off, like pursuing a passion project or traveling. Follow these tips to save for the day you have more time on your hands: 

• Automate your savings and focus on retirement. With more money freed up now that the kids aren't living at home, consider putting those funds toward your savings and retirement accounts to build up your retirement savings.
• Consider downsizing your home. Once your kids move out, there may be less of a reason to hold onto a large house. Think about where you want to live in 10 or 20 years. Downsizing your home can help you save money, which you can put toward financial goals like retirement.

5. Preparing for Retirement 

Wouldn't it be great if every day were a weekend? When you retire, it is! In retirement, you can relax and enjoy all the time in the world. And the best way to prepare for that day is to save and plan for the things you want to do in retirement, whether it's traveling or setting up your legacy. Consider these suggestions for saving for retirement: 

• Contribute to your 401(k) and meet your employer's match. If your employer offers a 401(k) and a matching program, take advantage of it. Contributions are tax-deferred, so you won't have to pay taxes on the amount until you withdraw it. Plus, any contributions within the yearly limit are tax-deductible, which means you may be able to reduce your tax bill.³
• Open an individual retirement account (IRA). Depending on your income level and if you're in a workplace retirement plan, you can contribute to a traditional IRA or Roth IRA. A traditional IRA is tax-deductible, while a Roth IRA is funded with after-tax deductions. 
• Once you get close to retiring, see if you can delay receiving Social Security. Pushing back your payments could make a big difference: The longer you defer accepting benefits before you turn 70, the more you'll receive in the future.⁴
• If you're over 50 years of age, take advantage of catch-up contributions. When you're younger, annual contributions to IRAs and 401(k)s are limited. But once you turn 50, you can contribute beyond the normal limits with catch-up contributions.⁵

Start Saving for Whatever Life Throws at You

Whether you want to start a family, change your career, or travel when you retire, a savings account can help you achieve your financial goals.

If you're ready to start saving for life's milestones, find out how a high yield savings account at Synchrony Bank can help.

READ MORE: How to Avoid Lifestyle Creep and Save More Money