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When it comes to saving money, it can be hard to know where to start. Between your retirement, next vacation, and down payment on a new house, it’s easy to find yourself confused and unsure of where to focus the bulk of your saving strength. Luckily, there are a few simple questions you can ask yourself to help make sure your savings contributions are properly prioritized.

1. Do I Have a Safety Net?

When it comes to maintaining financial stability, few things help as much as a well-stocked emergency fund. Whenever you’re faced with life’s unexpected expenses, an emergency fund can help you cover the costs without resorting to a credit card and putting yourself into unnecessary debt. Ideally, your fund should be able to cover anywhere between 3 to 6 months worth of expenses. While it might seem like a lot, getting your emergency fund out of the way will allow you to tackle your other savings goals from a place of security.

Here are some tips on the best places to keep your emergency fund.

2. Am I On Track For Retirement?

Retirement may seem like a long way off, but it’s important to start saving as soon as possible so you can receive the full benefits of compound interest or an employer match. A general rule of thumb is to save 15% of your income towards retirement savings, but this may vary depending upon your particular financial situation. If a 401K option is unavailable to you, you may want to look into an IRA, which can help minimize the tax burden on your savings. Regardless of how you decide to go about it, the earlier you start to save for retirement, the better. 

3. What Are My Long-Term Savings Goals?

What major expenses do you have coming down the road? Do you eventually want to buy a house? Have kids that need to go to college? Long-term savings goals tend to be geared towards major purchases or momentous life occasions, like buying a home or getting married. While arguably not as pertinent as an emergency or retirement fund, these goals do require a lot of time and planning. See how much money you have left to contribute to these endeavors, and then you can divide your money between them in whatever way you see fit.

Don’t forget you can save money on interest rates if your credit is in good standing. You can spot sudden, unexpected changes that might impact your credit score in your free credit report summary, which is updated every 14 days on Credit.com.

4. The ‘Just for Me’ Fund 

Vacations, major electronics, and other big non-essential purchases can all be covered by a “just for me” fund. These are items or experiences that may cost a hefty sum of money, but aren’t really conducive to your overall financial wellbeing or major life goals. These are typically considered to be lowest in priority since they’re more-or-less things we want as opposed to things we need, but providing you have your other major savings goals under control you should be able to contribute to your “just for me” fund without concern.

While it might be tempting to focus on the more fun and easily attainable goals in your savings plan, it’s very important to watch out for your future self. As we grow older, opportunities to save money start to dry up, making it more difficult to achieve our goals. But providing you focus your savings efforts in the correct ways today, you should be set up for a positive financial future.

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