Updated on 09.22.11

How to Save for Multiple Goals at the Same Time

Trent Hamm

Shannon writes in with a great question:

I’m trying to figure out how exactly I should save for several goals that I have. Here are the things I want to save for:

1. A BlendTec blender – $300
2. A complete refinishing of the downstairs bathroom – $3,000
3. A vacation to Germany next summer – $5,000
4. A car replacement – $12,000
5. A house down payment – $25,000

How do I prioritize these things? How do I go about saving for different goals? Where do I put these different batches of money?

This is a great question, one that you spelled out incredibly clearly and one that most of us struggle with to some extent.

Let’s break down your question into multiple pieces.

How exactly do I save for multiple goals at once? The easiest way to do this is to choose a bank that facilitates this process quite easily. I can recommend two banks for this – ING Direct and SmartyPig. I’ve used both of these banks. They both have great customer service and they each have a set of tools to make saving for a lot of goals quite easy.

With ING Direct, you simply open an account there, which will give you a single savings account. Once you’ve done that, it’s quite easy to simply open additional savings accounts and give them each nicknames. Just create an account for each goal.

With SmartyPig, you actually create savings goals within your account. You can create as many as you’d like.

With both of these, you simply link your new account to your regular checking account and set up automatic transfers to fund each of the goals or specific savings accounts. Easy as pie!

But how much do I save for each goal? The key thing to remember with any and all savings goals is that you’re trying to come up with a certain dollar amount at a certain time. Shannon certainly knows what her dollar amounts are, but she’s mostly unclear as to the timeframe.

Let’s come up with some examples of deadlines that Shannon might decide on.

Shannon wants the blender before Christmas, so she has three months to save for the $300 blender.
She wants to refinish the downstairs bathroom next spring, so she has six months to save for the $3,000 renovation.
She wants to travel next summer, so she has nine months to save for the $5,000 trip.
She wants to replace her car in two years, so she has twenty four months to save for the $12,000 car replacement.
She wants to buy a house in four years, so she has forty eight months to save for the $25,000 house down payment.

So, how much does she have to save per month for each goal?

For the blender, she needs to save $100 per month ($300 divided by 3 months).
For the downstairs bathroom, she needs to save $500 per month.
For the trip next summer, she needs to save $555 per month.
For the car replacement, she needs to save $500 per month.
For the house down payment, she needs to save $521 per month.

Now, that seems pretty stiff, doesn’t it? That’s a total of about $2,200 per month to save. What if Shannon can only save $1,000 per month for her goals?

There are two ways to do this. One is to simply prioritize. Is there one goal (or more than one) that can be postponed for a while?

The other is to simply focus on the goals chronologically. In other words, she goes through that list and applies the full $1,000 toward each goal on the list, with the nearer-term goals at the top and the longer term goals at the bottom.

So, during the first month, she’d put $300 toward the first goal, completely fulfilling it. She’d then drop $700 toward the second goal. Over the next two months, the full $1,000 would go toward the second goal. In December, she’d put $300 toward the second goal, fulfilling it, then put $700 toward the trip goal. This will get her pretty close to fulfilling all five of the goals.

In other words, if all of the goals have a high priority, put all of your savings toward the one with the closest deadline. When it’s fulfilled, move on to the next goal.

Good luck, Shannon! You’re definitely on the right path.

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  1. lurker carl says:

    Putting tags on your savings does not make it accumulate faster. Spend less and earning more will, however.

  2. JC says:

    1. Figure out how much you can save monthly/annually.

    2. Prioritize. Which items can be put off. Which items will give you the most satisfaction. Which items are purely optional or have cheaper alternatives?

    3. Question your wishlist. Why would you spend $3k on a bathroom remodel if you are going to buy a new house? What’s more urgent – a new car or that vacation?

    4. Other savings. What else can you cut from your expenses and *ensure* you make that money go towards these goals?

  3. Marinda says:

    Try to reduce the amount of money you save on that bathroom remodel. Instead of a complete overhaul, consider and update and check out sites online and DIY sites for things you can do yourself.

  4. lurker carl says:

    The list of items is something Trent made up.

  5. valleycat1 says:

    As Suze Orman says, it isn’t about what Shannon says she wants, her question is how to go about prioritizing & saving for the items.

    So, I agree with #3 JC (items 1,2, and 4).

  6. JS says:

    I agree with JC and valleycat1. The only one questioning and prioritizing what Shannon wants to do with her money should be Shannon.

    Having separate savings accounts is really helpful- pooling all your savings into one account can keep you from seeing if you’re saving enough for each goal.

  7. Angie says:

    LMBO @ lurker carl :D (specifically comment #4)

  8. Derek says:

    It’s effectively the debt snowball for savings associated with priority of need/desire.

  9. jackie says:

    You don’t need an online bank account to have multiple savings. I’ve had multiple “shares” in my savings accounts since the 80s at a small local credit union. They can do it anywhere.

  10. krantcents says:

    Good ideas! I set upp a savings deduction for my real estate property taxes, insurance and avacation. They all have different dates or priorities.

  11. Steven says:

    Are there cheaper alternatives? $5,000 for a trip to Germany is really expensive. I’ve traveled all over the world, and never spend ever close to that, including flights, food, lodging, entertainment, admissions…If the pricetag you’ve got on travel is this high, I wonder what else is also high. Find ways of cutting down on the costs of these things, then prioritize them. I’d suggest doing them chronologically based on importance. I have trouble saving for multiple things because I feel like I’m putting everything off and not accomplishing anything. Give yourself some victories once in a while, and all the things you’ve cut back on will start to feel worth the effort.

  12. Robin S says:

    Something Trent didn’t mention is how to use windfalls in saving for goals like these. When we get a windfall (raise, bonus, birthday, find $10 on the street…) we send most if not all of it to our savings goals. In the case of multiple goals like this, we usually send it to our biggest goal (which is also currently our house down payment). For us, mentally, the bigger and faster it grows, the easier it is for us to keep motivated when savings for something really expensive and far in the future.

    Good luck with your savings and projects!

  13. Annie says:

    When I have goals like these, i have a tendancy to prioritize them. For example a few years ago this was a list for me.
    1. Save money for a downpayment for a home
    2. money for furniture, decor etc
    3. buy a newer car
    4. build up by emergency savings more than what i have accumulated so far
    5. start a roth ira and contribute more to my 401K

    i did this in the order it was important to me, my first priority was the house so i made sure i saved enough for the house and fixes that comes with it, then it seemed easier to get that accompolished and buy my car, etc.. now my goals are more smaller like buying a big screen TV by next year, travel to Europe, help Mom with her basement etc…
    Good luck and i hope you get everything on your list.

  14. Sheri says:

    I love this idea, Trent, the “snowball” method of savings as Derek called it. The projected amount that the reader needs to save is huge, several thousand dollars each month, and it makes the whole thing seem too daunting to take it on in the first place. But $1000 a month broken down into even smaller, more manageable parts, is much easier to handle and more affordable. Which means I am more likely to do it as well!

  15. CMT says:

    Umm… Did no one even do the math on this one?

    The post says she has to save $2200 per month to meet her goals. But, that’s the total for each goal over the given time frames, so as each goal is met, that amount goes down. Why would anyone ever do that?!?!?

    The second plan has her more than “pretty close” – it has her meeting the goals 4 months early.

    I have a hard time believing anyone w/ the financial skills to have a grand per month to save for wants doesnt have the financial skills to develop a savings timeline.

    As others have said, being completely made up helps.

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