The only 3 financial goals you need: Simplify your life and save money in a few easy steps


What's your biggest money saving goal? Paying off college loan debt? Building credit? Having enough money to eventually afford a house? All of the above? If you feel overwhelmed by goals, it can actually make it harder to save money and get closer to accomplishing any of them, let alone one.

While it would be awesome to have a fairy wave her wand and make all your wishes come true, you'll have the most success if you stop wishing for an escape hatch, take control and simplify your expectations. Research actually shows that fewer savings goals leads to more money saved.

"Rather than saying you are going to save money, indicate how much money you'd like to save by a certain date," said Erin Lowry, author of Broke Millennial: Stop Scraping By and Get Your Financial Life Together in a phone interview. For instance, you could set a goal of saving $5,000 in four years by stashing away $1,250 a year, which breaks down to a little less than $105 a month. 

Estimating exactly how much cash you will need to hit certain life milestones — for a car, home or baby, for example — is a crucial step, as much as you might want to avoid it. "Get into the mindset that you are going to save a specific amount of money early in life," Jessica Moorhouse, personal finance expert and host of Mo'Money podcast said in a phone interview.

To keep your life easy, you really need only three major categories of goals — which will help you hit a wider range of objectives. Luckily, once you do the math, you can set your savings on autopilot, with direct deposits into accounts set up specifically for those goals. Here are the three major ones to aim for.

1. An "f-word" fund

Call it a "freedom" fund — or a "f*ck-off" fund. Both are appropriate. The idea is to aspire to enough financial independence that — at least at some point — you won't have to rely on anyone else if you don't want to.

Money is a big reason many people feel tied down by jobs or relationships. So building your f-word fund will help you unshackle yourself from financial binds, whether that means moving out of your parents' house or quitting your job and moving to India. Writer Paulette Perhach went viral with a popular story about the value of a f*ck-off fund, which allows you to walk away without looking back, as she wrote.

This kind of fund should include enough money to support your lifestyle for at least three to six months, like an emergency fund — though if you will really want to escape, you could try to save double or triple that. The important thing is starting, even if you need to start small.

One surprisingly easy move? Cutting your food budget down: If you're spending $30 a day, cut down to $15 and put the rest into a interest-bearing savings account. By the end of the month you'll have en extra $450 you didn't have before. (That sound really hard? Here's how to eat well for just $5 a day.)

Giving your f-word account a specific name is also psychologically helpful: "I always nickname all of my savings accounts," Lowry said. The name reminds you why that money is being saved, so you're less likely to pull cash out for an impulsive shopping spree. Taping a photo of your dream apartment or other visual reminders of your goal to your desk might help, too, research suggests.

2. An "adulting" fund

Whether you are planning to buy a house, pay for a wedding or hope to have children, an "adulting "or family fund can provide the foundation to achieve one of many grown-up life events. This account is meant to build funds that you will use between one and 10 years down the road. Where do you start?

Analyze what you can realistically afford, whether it be purchasing your first home or having a baby. Families typically spend anywhere from $12,350 and $13,900 a year to raise their children, but purchasing your first home depends on affordability in your area and mortgage type. The national median home value is $196,500, so you would need to save $39,300 for a 20% downpayment. Your downpayment amount could be less if you check out FHA, VA or low downpayment conventional loan programs — or consider moving to cities where buying a home is especially favorable or easy for young people.


Set your ultimate financial goal number based on the total amount you'll need and determine how much you can afford to stash away from each paycheck. If you are saving with a partner, take a hard look at your salaries. Splitting the savings 50-50 isn't always logical the person who makes more should probably save more. 

Look for an account that provides the most interest, either in a savings account or CD. Also consider stashing the funds in a different bank from the one you normally use, to discourage dipping in. "If that bank is separate from where you have most of your accounts it makes it more difficult for you to transfer money from that account to your checking too," Lowry noted.

3. A "dream goal" fund

Already knocked your freedom and adulting fund goals out of the park? When it comes to saving for your dream — whether it's a fancy car, a trip or an early retirement — approach it as you would any other money saving goal by first estimating an amount.

An Aston Martin can cost well over $200,000 and a weeklong trip to Paris for two could be nearly $4,000. Also consider additional expenses associated with the goal — like budgeting for premium gas if you are going for an expensive car — or including spending money for that trip to Africa. Early retirement may require you to get even more Spartan about saving; if you can survive on half your income, that's a good start.

Next, based on your goal total, figure out how much you will need to save each week or month and arrange to have that money automatically deposited into your dream fund or separate account. If you get a raise or receive extra cash through an extra job, tax refund or inheritance, sweep that money into your dream fund before you spend it.

You may have better luck achieving your goal if you write it down: In a study on goal setting, those who wrote down their goals and dreams were more likely to achieve them than those who did not, HuffPost reports.

Finally, remember, not all "dreams" are necessarily financially frivolous. Nearly 10% of wealthy people in a recent survey said they diversify their investments by parking cash in art, wine and high-end cars. You shouldn't expect this to pay off — it's always a big gamble whether you're investing in a winner — but growing your money even more might be a fun, unexpected side effect.

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