The new year is right around the corner, and you probably have already identified a few goals for 2024. That list may include several of the usual suspects: more exercise, better diet and debt elimination. Those are all good focus areas. You might even have some big-ticket expenditures on the horizon.
If you haven't already done so, review your calendar and upcoming plans with an eye on identifying those spending plans that would benefit from some preparation in the form of savings. As pay raises start to roll in, such as the 5.2% the military will receive in January, it's important to have a plan for the extra money.
Here are five solid reasons to save.
1. Wedding Bells
If you have kids, this is an expense that lies in your future. It's top of mind for me because we just paid for our daughter's wedding. Unfortunately, we waited until she got engaged to start saving. Big mistake. So even if you don't see a wedding in your immediate future, it wouldn't hurt to start building a fund for that purpose. As is always the case, the earlier you start, the easier it will be. If I had to do it all over again, graduation -- from kindergarten -- would have been about the right time to get the wedding savings game going.
2. New Wheels
While increasing car prices have moderated in recent months, they aren't going backward. According to Experian, the average new vehicle loan was more than $40,000. While a down payment can help keep you from being caught owing more than the vehicle is worth, a more aggressive savings approach could allow you to greatly reduce or eliminate your next car payment. That means even if you are just getting used to a new vehicle, it's not too early to start saving for the next. Another reason to save.
3. Your Next Trip
Unlike the first two items, this is an area where we have excelled. For years, our big family trips have all been fully funded prior to hitting the road, skies or seas. I can tell you definitively that it makes the vacation a lot more relaxing. So whether your next trip is this summer or well down the road, making it stress-free provides yet another great reason to save.
4. The White Picket Fence
Unfortunately, a new home has become an increasingly difficult goal for many Americans. Rising interest rates, inflation and low supply have all created a difficult environment for homebuyers, especially first-time homebuyers. One surefire way to mitigate these factors is to build a robust "home fund." That's the case even if you plan on buying with a VA loan. You may not need the cash for a down payment, but you can have it to help with all the extras a new home requires and to provide a boost to your emergency fund once you move in.
I was just lamenting the fact that it took me too long to walk my talk on this front. While the idea of retirement is starting to sound good, my reality does not match. Why? Well, at least in part, because I didn't focus on allocating a portion of each pay raise to my long-term goals.
Retirement could be a great place to allocate a portion of your pay raise. For example, if you're currently saving 10% in the Thrift Savings Plan, boost your contribution to 12%. You will be saving more for retirement, and you'll still have extra money leftover for whatever fires you up. Create your savings plan today, and don't let that extra money slip into your everyday spending without tangible benefit.
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