Saving for a home down payment or future educational expenses can take years, and doing so often seems unattainable. However, with smart spending habits and proper planning, you can achieve your savings goals. From little changes in your daily spending to long-term financial planning, incorporating these tips will make those big purchases seem well within reach.

Designate funds

Setting money aside specifically for large purchases is the first step, so if you already have a savings account, you’re ahead of the game. Plan to automatically put a certain amount of money into a savings account every month. As you make changes to your spending habits and see your savings grow, your goals will finally seem possible.

Most banks allow for multiple accounts, so consider opening one for each specific purchase you intend on making in the future. This will help you prioritize your goals and aides in forming timelines. You can contribute more toward a home down payment you’re targeting in five to ten years while depositing a little less into long-term college savings for the kids.

Start small

While it might sound cliché, saving any amount you can is better than saving nothing at all. Start with a low dollar amount that you know you can afford — even if it’s just $10, you’re that much closer to reaching your financial goals.

If you use direct deposit, consider having a percentage of your check go straight into savings. Keeping money you want to save out of your checking account makes the process much easier. Be sure you can afford whatever percent you select to reduce the number of transfers from your savings account to your checking account. With money being set aside directly, you’ll see your balance multiply without any special effort.

(Getty Images)
(Getty Images)

Investing or saving

Savings accounts typically yield very little in interest, but you’re never at risk of losing a dime, so they remain the safest option. If you’re most comfortable with savings accounts, shop around for options with higher returns.

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While investing money intended to make large purchases isn’t typically recommended, there are numerous ways to put your money to work for you safely. Government bonds and bank-issued certificates of deposits, or CDs, come with very little or no risk at all to the investor. You will incur penalties if you cash out early, so be sure to read the fine print of any agreements and make sure you can afford to be without that money for the length of the deal. Options with larger returns will typically come with a higher risk. This is usually the best option for higher-income earners who can afford to take a few risks while still saving in more traditional methods.

Stocks that pay high dividends are a great way to see returns along the way, but market volatility can limit earning potential. Bundled options like ETFs might provide higher returns than CDs and bonds, and they’re a safer play than individual stocks, but you won’t receive dividends, and positive returns are far from a guarantee. Investments are best suited in conjunction with no-risk options like a savings account, rather than solely relying on them for long-term goals.

Eliminating excessive spending and sticking to a budget will only carry you so far — with these tips and a smart plan, your savings will start accumulating so you can soon make those large purchases.

Finances FYI is presented by 1st Security Bank.

At 1st Security Bank of Washington, we take a customized and personal approach to your financial well-being. We live in the communities we serve, so our branches offer tailored solutions to their communities. We believe relationships make the difference, and that sets 1st Security Bank apart.