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6 tips to prioritize your savings goals

Written by - Marisha Bhatt

January 13, 2023 6 minutes

‘Save now and enjoy later’ is a phrase we have all heard from our elders. The idea of savings has been driven to every person, in most cases, right from the time they are mere kids. Be it saving beloved chocolate for later or saving pocket money for some favourite toy, the idea of savings is not alien to any person. 

When a person grows up the quantum of savings increases as the need for savings also increases. But the glaring question that some people often face is how can they prioritize their goals and allocate their savings towards them. Sometimes the goals are more or less equally important and the finances needed are also not less. So how do you choose your goals in such a case and what are the strategies used to save more for one’s goals? 

Given below is a brief discussion of the same and ways to effectively build savings to achieve various goals. 

Also read : Why is it important to maintain a savings ratio?

Need for savings goals and tips to prioritize them

Every person has more or less a defined set of goals that they want to achieve in their life. These goals however may differ in the order of priority. This priority will be depending on the stage of life that a person is in, the resources that they have, the time frame needed to achieve the desired goals, etc. To determine the right priority of savings goals, it is first important to categorize such goals in four broad parameters, namely, emergencies, liabilities, responsibilities, and desires. Doing this exercise will help people understand the goals better and also if they really have a place in their budgets.

6 tips to prioritize savings goals

List the goals in life in the specific time frames 

As mentioned above, the first step in prioritizing goals is to effectively list them. The act of listing them does not stop just here. It is equally essential to segregate them in terms of the time frame needed to save for them. These time frames can be short-term goals (like buying a car or small trips), medium-term goals (like funding towards the downpayment of house property), and long-term goals (paying for the higher education of children or their wedding). 

Save for retirement 

Retirement is a time when one can either spend being dependent on their children or their relatives or live their life on their own terms by having enough corpus to meet their requirements in the post-retirement period. For the latter, however, it is important to start saving at the earliest. This will give them the advantage of choosing from multiple long-term investment options as well as gaining the maximum benefit of compounding on such investments which is the strongest factor in wealth creation.

Save for emergency fund 

Another important goal that has to be given top priority is saving for an emergency fund. An emergency fund is a lifeboat that is needed at any unfortunate event. Therefore, it is important to start building one at the earliest. An emergency fund should be in the form of investments in liquid assets that can be immediately accessed and can also provide moderate returns when not in use. An effective emergency fund should be equal to at least 6 months to 12 months of the monthly income in order to be sufficient to meet any kind of emergency

Do not forget insurance 

It is an established fact that having good health insurance and term insurance is necessary for every person. However, most do not get one till they are in their 40s. At such a time, the cost of insurance (premium amount) is higher making it a bigger outflow from the monthly expenses. Therefore, getting good health insurance and a term insurance plan should be among the immediate priorities for any person.

Account for evolving priorities

The goals that a person has in their 20s may not be the same in their 30s or 40s. This evolving nature of goals and priorities should also be considered while making investments towards achieving savings goals. Investments toward goals that are not definite (like a world tour, buying two houses, etc) should be preferably in liquid assets so they can be utilized for the changing goals at different stages of life. Thus, it is equally important that a person should revisit their goals every 5 to 10 years to keep their views and needs in sync. 

Save for major expenses

There can be a need for funds to meet any major expenses like medical treatment that is not covered by health insurance or some repairs to the house which can be quite extensive. These expenses ideally should not be funded through emergency funds as they can be exhausted in an instant and the process to build another from scratch can take years in the later stage of life with increased financial obligations. Therefore, it is advisable to account for such sudden expenses too while prioritizing savings goals and allocating some funds regularly towards the same. Such funds, if unused, can be added to the emergency fund or retirement fund for better returns.


The first step toward prioritizing savings is knowing the importance of savings in the first place and taking concrete steps in that direction. Simply acknowledging the need for savings and not acting on them is of no use and will result in a lot of struggle in the future, especially in the post-retirement period. Therefore, it is crucial to ascertain the expectations and goals that one has from their life and the kind of future that they are looking forward to deciding on the savings goals and prioritizing them correctly. 


How do you prioritize multiple savings goals?

The simplest way to prioritize multiple savings goals is to scale them on the basis of needs and wants considering the time taken to meet such goals.

What is a realistic savings goal?

A realistic savings goal is having a realistic view of achievable goals that can be met through the funds available for savings.

What is the minimum amount that has to be allocated towards savings?

According to most experts, a person should allocate a minimum of 15% to 20% of their monthly income towards savings to create a good savings and investment portfolio in the long term.

Is tax an important consideration while making decisions relating to savings goals?

Yes. Tax is an important factor to consider as it directly impacts the availability of funds for savings and investments. Therefore, it is important to consider investments that are tax effective while allocating funds towards savings goals. The post-tax returns will help in determining the time taken to achieve them in realistic terms.

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