The Hierarchy of Savings

It’s difficult, in this economy, to talk about savings.  However, saving money is still essential, for all families.  Here are some of the common areas of savings, in my order of importance.

• Emergency Fund: if you don’t have an emergency fund, stop right away, and put a plan together (this post can help).  An emergency fund can be used for medical bills, home repairs, automobile bills, and many other things.  It’s absolutely essential for any family to have, and in general, should be held in a low-risk, short-term account, such as a money market account.
• Short-term savings: for things like automobiles, family vacations, televisions, etc, you may want to put aside some money regularly.  Again, if you plan to access this money in the short-term, you’ll need to invest it somewhere safer than the stock market.
• Retirement savings: it’s been said that no one will finance your retirement, and this is absolutely true.  You can get loans for just about everything else, but not retirement.  So, make sure you are in a good position to retire in comfort.
• College savings: thinking about college savings can definitely be depressing.  My biggest suggestion here is to make sure you and your spouse are on the same page regarding the type of college and the amount of money you are hoping to fund.  Then, figure out how much you will need and start saving, even just a little bit!

In upcoming posts, I’ll further investigate how specifically to save.