Mid-year money moves: Pursue your financial goals

Financial success is about balancing savings, investments, and expenses while also being adaptable to changes in your life. Taking time mid-year to evaluate your financial situation and reestablish your goals can help you increase your overall financial wellbeing.

What you’ll learn

• Create room in your budget
• Define your goals
• Build a strategy
• Make retirement a priority
• Build an emergency fund
• Save for college without sacrificing retirement
• Pay down high-interest debt
• Prioritize when goals compete
• How to take action today

Create room in your budget

When trying to save more for your goals, the first step is freeing up money. Many budgeting approaches suggest living on roughly 70%-80% of your income, which allows you to allocate the rest toward savings and investments. To make this happen, track your spending using a budget worksheet, app, then identify areas where you can cut back. For example, reducing unnecessary subscriptions or dining out less frequently can quickly free up extra cash for your priorities.

Define your goals

Before saving, you need to know what you’re saving for. Ask yourself these three key questions:

• What are you saving for? Whether it’s a home, retirement, college tuition, or a dream vacation, knowing your "why" helps you stay motivated.
• When will you need the money? Your timeline influences whether you focus on short-term or long-term strategies.
• How much will it cost? Don’t forget to factor in inflation for future expenses. For instance, what might cost $50,000 today could cost significantly more in 10 years.

Build a strategy

Once your goals are clear, develop a strategy that aims to achieve them. For example:

• How much should you save? Break your goal into manageable chunks, like saving 50% of college costs or contributing 15% of your salary toward retirement each year.
• Where should you save? Choose the right accounts based on your goals. For long-term investments, prioritize accounts with tax advantages like a 401(k) or 529 plan.ⁱ
• What’s your investment strategy? Match your risk tolerance to your timeline. If your goal is decades away, consider a more aggressive investment approach that aims to help your money grow.

Make retirement a priority

If you have multiple financial goals, retirement is often considered a primary long-term goal. It’s your most important long-term goal because there are no loans for retirement. Some guidelines suggest saving around 15% of your income annually, including any employer contributions.ⁱⁱ

To stay on track, use these age-based savings benchmarks:

• Age 30: Have about half your yearly salary saved.
• Age 40: Aim for 2x your salary saved.
• Age 50: Work toward 5x your salary saved. Starting early gives compound interest more time to work in your favor, but it’s never too late to begin.

Build an emergency fund

Life is unpredictable, so it’s essential to have a financial safety net. Many guidelines suggest an emergency fund should cover roughly 3 to 6 months of expenses and be kept in a liquid, easily accessible account like a high-rate savings account. If building this fund feels overwhelming, start small by saving 15%-20% of your income over time.ⁱⁱⁱ

Save for college without sacrificing retirement

While it’s natural to want to prioritize your child’s education, remember to take care of your retirement first. Your child can explore other options like scholarships or student loans, but you won’t have similar alternatives for retirement.

If college for yourself or helping your children save for college is one of your goals, aim to save about 50% of projected costs and consider using a 529 plan, which offers tax advantages for education savings.

Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

Pay down high-interest debt

Debt, especially high-interest credit card debt, can quickly derail your financial goals. Consider prioritizing repayment of high-interest balances as part of your overall plan.^iv

Two common payoff strategies include:

• Behavioral approach. Pay off the smallest balance first to build momentum.
• Economic approach. Pay off the debt with the highest interest rate first to save more money over time.

Prioritize when goals compete

Financial goals often overlap, so it’s important to know how to prioritize them.

• Retirement vs. emergency fund: Contribute enough to your retirement to get your employer match first, then focus on building your emergency savings.
• Retirement vs. debt: Pay the minimum toward retirement contributions if you’re tackling debt. Only increase contributions after high-interest debt is under control.
• Emergency Fund vs. debt: Build an emergency fund first, as it prevents you from relying on credit cards for unexpected expenses.

How to take action today

Pursuing your financial goals is a journey that requires consistent effort and thoughtful decisions. Start by:

• Living on 70%-80% of your income.
• Making retirement savings your top priority.
• Building an emergency fund and tackling debt. Small moves can have a great impact, and remember you can always adjust your plan as needed.

For personalized advice, connect with an Alliant Retirement and Investment Services Financial Consultant to create a strategy tailored to your unique goals and circumstances. You can also watch the full webinar on this topic on YouTube - Alliant Retirement and Investment Services.