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How to prioritize your savings goals

Conventional wisdom tells us to save early and often. But it can be hard to juggle multiple financial goals and determine how to allocate your savings. Here’s a road map.

Create an emergency fund

Without emergency savings in place, an unexpected car repair, job loss or trip to the hospital could force you into debt and derail your goals.

How much should you save?

Aim to save 3 months’ worth of expenses when starting an emergency fund and build from there.

Most families should strive to have 6–9 months of expenses saved for an emergency.

Tip: Keep emergency fund savings in an easily accessible savings account. Research savings account options from Bank of America.

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Pay down high-interest debt

Debt can get in the way of your savings efforts and make it challenging to reach your goals. Focus on paying down any high-interest debt you may have.


Average credit
card APR

Credit cards, for instance, tend to have higher interest rates, meaning your interest payments might cost more than what you could earn from saving or investing your money. Paying this type of debt down can save you money in the long run.

Source: Federal Reserve, June 2022

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Save for retirement

If you have an employer-sponsored retirement plan, such as a 401(k), be sure to contribute to it as early as you can. If you don’t have access to an employer-sponsored plan, you might consider opening an individual retirement account (IRA). Both 401(k)s and IRAs offer certain potential tax benefits, and many employers will offer to match a percentage of your 401(k) contributions.

It pays to start early

Savings at age 67 if you contribute 6% of a $35,000 salary with a 50% employer match:



Start saving at 26



Start saving at 36

Assumes 5% rate of return, compounded annually at year-end. Assumes salary increase of 3% a year with inflation.

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Save for short-term goals

These goals fall roughly in a 1- to 5-year time frame. It’s helpful to set a specific savings goal so you know how much money you need, as well as when you need it. From there, figure out how much to set aside each month.

Short-term savings goals might be …

A down payment

A vacation

Your wedding

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Save for education

College degrees are more important than ever — Adults with a bachelor's degree earn an average of $2.8 million during their careers, $1.2 million more than the median for workers with a high school diploma. But college is also more expensive than ever, so saving for it is key.

Source: Georgetown University Center on Education and the Workforce, 2021

Estimate how much your child’s college might cost and consider a tax-advantaged 529 college savings plan. Make sure saving for your child’s college doesn’t interfere with your own retirement planning, though. There are loans for college but not for retirement.

College savings plans aren’t limited to parents. If you’re considering going back to school, you may want to build the cost into your savings plan.

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Choose the savings plan that’s best for you

Your savings priorities are personal, and they may change and evolve with your circumstances. But having a savings plan in place can help prepare you for the unexpected and put you on the path toward achieving your goals.

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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2024 Bank of America Corporation.

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