How to Prioritize Your Savings in 2019

Your 2019 resolution: To seriously pad your emergency savings. Also, your 401(k). And 529. (Your four-year-old will be college bound in T minus 14 years, after all.) But all this begs the question: With so much to save for at once, how the heck do you prioritize? We checked in with Priya Malani, founder of financial planning firm Stash Wealth, to get her advice.

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budget to do list

First Things First: Make A List Of *what* You Want To Save For

Before you can start figuring out which order to save in, you need to start thinking about what you’re saving for. Make a list that includes it all—emergency fund, college tuition, an African safari in 2020. Then, next to each item on the list, assign a timeline or deadline. The goal of this exercise? To know what you’re saving for but also exactly when you need the money by.

african safari

Next, Rate Each Savings Goal As A Need, Want Or Wish

If saving for your kid’s college is a need, but going on an African safari is a want or even a wish, you’ll want to make sure you’re on track to satisfy your college savings requirement first. In other words, ask yourself: Is this savings goal critical (i.e., under no circumstance do you want your kid to take out student loans) or is it a "nice to have" (i.e., you’d like to be able to contribute to school, but if they have to take out loans, you’re OK with that)? This way of thinking can help you prioritize, so you know you’re allotting cash to satisfy all of your goals.

cash in wallet

Now, The Tricky Part: Calculate How Much To Set Aside

To do this, you’ll need to look at your list of savings goals and then back into how much you need to be setting aside for each one, based on your timeline. Some examples: Say you want $1,500 by August 2019 for an end-of-summer getaway to Cabo and it’s January. You’ll need to start saving $215 a month. Or let’s say you want to pay for four years of college at a private institution for your newborn, you’ll need to start saving $1,400 a month, which will add up to $300,000 by the time they turn 18. Of course, these are estimated numbers, but you can use an online calculator to figure out exactly how much you need to be saving today to hit all your down-the-road targets.

savings goals

About That Emergency Fund

This should actually be priority number 1, because you need a financial cushion for life’s inevitable curveballs. Without it, you’ll end up making a poor financial choice like using a credit card or tapping other savings (your 401(k) or your 529), which throws off all your entire plan for your other savings goals. Malani recommends a cash reserve that’s enough to cover three months. (Other financial professionals suggest six to 12 months, but according to her, that’s too much money sitting in cash.)


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Rachel Bowie is Senior Director of Special Projects & Royals at PureWow, where she covers parenting, fashion, wellness and money in addition to overseeing initiatives within...