15. Save for your goals.

15. Save for your goals. Down payment on a house. college fund for your kids. Vacation of a lifetime. etc....
 
Let's say you want to save for a down payment on a house and save for your child's college education. The college savings is a long term goal and the down payment is a short term goal.

Go to your companies payroll dept or person and ask to redo or update your direct deposit form. Have two predefined amounts deposited in two separate accounts. The Down payment savings should go to a liquid savings account that has as good of an interest rate as possible. I would use an online savings account for this. You should be able to find 2% out there. Check bankrate.com for the best interest rate. The college fund should go to a 529 tax exempt education savings plan. The 529 is tax advantaged so it's the obvious choice for educational goals. More on 529's in a later post. 

If your goal was more than 5 years out and not educational I would recommend using your online brokerage account. That way you could invest the money long term. 

For the self-employed. You need to treat these monthly savings goals as if they were bills. Put the monthly amount and the goal down in your budget. You can use an online bill pay service to set up regular monthly deposits. It's as close to auto-pilot as you can get while self-employed.

If you have a specific amount as a goal lets say $2000 in two years. Divide 2000 by the number of pay periods between now and then, in this case it's 52. That gives you $38.46 or $39 deducted from each paycheck. You can redirect multiple amounts to multiple accounts. You won't even notice it's gone. This is how I fund my wife's Roth IRA. The self-employed divide 2000 by 24 months which gives you $78. Pay $78 per month to your goal account as if it were a bill.

Looking at your goals totals can be overwhelming. Breaking them down to small monthly chunks makes it much easier. If you can save for those goals on auto-pilot, even better.