Download the Schwab app from iTunes®Close

How to Save for Multiple Financial Goals

A comfortable retirement. A new car. A down payment on a house. Paying for a child’s college education.

Coming up with a list of financial goals is generally easy. The bigger challenge is figuring out how to save for them all. The trick is to think strategically about your goals and write down a saving and investment plan for each one. A little effort today can help make a big difference down the road.

Here are a few steps you can take as you work toward achieving your goals.

1. Prioritize

Make a list of all the things you want to save for and how much you’ll need for each purpose. We suggest keeping the list short—if you have 15 different goals, you might struggle to keep track of them. Then, prioritize your list in terms of what’s most important to you and your family.

One way to do this is to group savings goals by needs, wants, and wishes, in order of importance. Saving for retirement will likely be high on the list of needs. And if you haven’t set up an emergency fund to cover at least three to six months of essential living expenses, make that a priority, too. Then, you can add purchases like a bigger home, college tuition, a dream vacation, a new car, or a festive wedding.

2. Categorize

Once you’ve listed your goals, it’s time to sort them. The time horizon for meeting each objective is a good place to start. This involves dividing your savings into three buckets: the money you expect to need within the next two years, three to 10 years, or 10 or more years.

Knowing when you’ll need the money can help you decide what sort of investments you should consider as part of your plan. In general, less volatile investments make more sense for short-term goals, as you’ll have less time to potentially recover from market declines. Conversely, you can opt for more aggressive investments for long-term goals, which provides more potential for returns to grow over time.

Take a look at this scenario:

  • Bucket 1: Funds for short-term goals, say in the next two years. This could include things like a wedding or nice vacation. Consider traditionally more stable investments, such as cash, money market funds, short-term Treasury bills and notes, or certificates of deposit. By putting money you plan to spend soon into liquid, readily marketable, generally low-risk investments, you can avoid having to sell other investments, such as stock, to raise cash in a down market.
  • Bucket 2: Money that you expect to need over the next three to 10 years. This could include goals like a down payment on a home. With a focus on growth and capital preservation, intermediate-term assets like a mix of intermediate-term bonds or bond funds and stocks may make sense for this category.
  • Bucket 3: Savings you expect to tap no sooner than 10 years from now, say for retirement or your kids’ college. This category can be invested for growth and income with a larger allocation to stocks.

These categories aren’t one-size-fits-all. Each should be tailored to your risk tolerance as well as your timeframe. And be sure to diversify. You don’t want the fate of your goals hanging on the performance of a single asset.

3. Invest

After identifying your categories, you can start putting money in them. Even modest contributions, when made regularly, can pay off substantially over time. One approach is to commit to investing a set amount toward a specific savings goal on a regular schedule—for instance, every month or every quarter.

Remember, research shows that waiting for the right time to invest is rarely a successful strategy. Time in the market is more important than timing the market, so put your savings—in every bucket—to work as soon as you can.

Also, stick to your priorities. Fund the items at the top of your list first, such as your retirement savings.

You’ll have to do some budgeting to figure out how much to save for each goal. Use one of Schwab’s savings calculators if you need help.

4. Review

Check on your investments at least quarterly (or more often if you have an aggressive portfolio). In general, you should consider making your allocations more conservative as you approach your goals. Shift away from riskier investments, such as stocks, in favor of more-stable ones, such as bonds. Major life events—a job change, the birth of a child, a marriage, divorce, or death of a spouse—may also call for some adjustments.

Regular reviews also make adjusting your investment easier. For example, if your realize that you’re not saving enough in a college fund as your child grows older, you might cut back your spending, increase your regular contributions, or (if you have more time to reach your goal) shift money into more aggressive assets that may generate higher returns.

Remember that you may need to rebalance your portfolio back to your target allocation from time to time. For example, if your stocks appreciate to the point where your stock allocation accounts for a larger share of your portfolio than your target allocation allows, and your bond allocation shrinks, you could consider selling some of the stocks and buying more bonds to bring your portfolio back in line.

Periodic rebalancing can help ensure your portfolio doesn’t drift too far from your target mix of asset classes. Not rebalancing is akin to letting the market decide your asset allocation over time, which can significantly change your exposure to risk.

Finally, stick to your plan. Down markets can be unnerving, but reaching your goals requires a long-term view and a commitment to staying the course through bad times and good.

What you can do next

Important Disclosures

Please read the Schwab Intelligent Portfolios Solutions™ disclosure brochures for important information, pricing, and disclosures related to the Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium® programs.

Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium are made available through Charles Schwab & Co. Inc. (“Schwab”), a dually registered investment advisor and broker dealer.

Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. ("CSIA"). Schwab and CSIA are subsidiaries of The Charles Schwab Corporation.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Diversification, asset allocation, and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets. Rebalancing may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events can be created that may affect your tax liability.

Periodic investment plans (dollar-cost-averaging) do not assure a profit and do not protect against loss in declining markets.

Investing involves risk, including loss of principal.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors.


Thumbs up / down votes are submitted voluntarily by readers and are not meant to suggest the future performance or suitability of any account type, product or service for any particular reader and may not be representative of the experience of other readers. When displayed, thumbs up / down vote counts represent whether people found the content helpful or not helpful and are not intended as a testimonial. Any written feedback or comments collected on this page will not be published. Charles Schwab & Co., Inc. may in its sole discretion re-set the vote count to zero, remove votes appearing to be generated by robots or scripts, or remove the modules used to collect feedback and votes.